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Editor's Note: Last week we offered our completely subjective Top 10 news stories of 2024 that impacted the asphalt industry in California. You can read the story HERE. This week we’re back with our fearless prognostications for 2025. If you would like to see how we did with our predictions a year ago, you can read that story HERE. For more detailed information and economic analysis, CalAPA members should consult the “2025 Asphalt Market Forecast for California” report that was sent to members on Dec. 2. Another source of insight, the annual forecast issue of CalAPA’s official magazine, “California Asphalt,” will hit mailboxes later this month.
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1. Long-term transportation funding proposal begins to take shape
The state tax on motor fuels, which has been the backbone of road funding for a century, will continue to show signs it is nearing the end of its useful life as more and more electric vehicles hit the streets in California. A broad coalition of transportation stakeholders, which has been studying the mechanics and practicality of the funding scheme for years, will come forward in 2025 with a proposal to transition the state toward a new funding mechanism that will be more sustainable for the long-term, and seek to build support around the plan, setting up a political battle in 2027 to push it through the Legislature or, as a last resort, the ballot box.
2. Washington dysfunction continues through 2025
Voter discontent and desire for change in 2024 swept Donald Trump back into the White House, and gave Republicans slender majorities in both the Senate and the U.S. House of Representatives. House Speaker Mike Johnson, with the slimmest of majorities in modern history, will spend most of the year wrangling the most extreme members of his unruly caucus while trying to push through Trump’s legislative agenda and avoiding a government shutdown over the soaring federal deficit. California, despite having the nation’s largest congressional delegation at 52 members, will nonetheless have diminished influence in Washington because the caucus is dominated by Democrats in a Congress controlled by Republicans. The drama will divert needed attention away from the complex and difficult work of laying the foundation for renewing a federal surface transportation bill.
3. As the economy improves, state tax revenues surge, avoiding austerity measures
Dire predictions in 2024 of state budget deficits up to $68 billion largely never materialized, and the state will enter 2025 on solid financial footing. Gov. Gavin Newsom will unveil a state budget that largely avoids severe austerity measures. Transportation funding will remain relatively flat, but investments in pavement maintenance will remain at levels that will not keep pace with the state’s aging infrastructure.
4. Government regulations to get greater scrutiny
In the wake of the U.S. Supreme Court’s landmark decision in 2024 setting aside the “Chevron Doctrine” that gives government agencies broad latitude to interpret Congressional action, all eyes will be on the regulatory-averse Trump administration on how environmental regulations are enforced, perhaps providing some respite to businesses that have been burdened by ever-increasing red tape and government overreach with questionable outcomes. Courts will be looking to resolve statutory ambiguities and find the best meaning of the statute. The federal government’s decades-long deference to California’s environmental regulations will receive additional scrutiny.
5. Caltrans management changes continue apace
A wave of retirements at Caltrans that began to crest in 2023 and reached its apex in 2024 with many new faces in key leadership positions, including district directors and key jobs that interact with the asphalt pavement industry. One key vacuum was created with the retirement at the end of 2024 of Cathrina Barros, Chief of the Caltrans Office of Asphalt Pavement. An acting office chief, Reimond Garcia, is in the position while a search is conducted for a permanent replacement, which will be announced in the Spring of 2025. The new leader will have plenty of challenges to keep on top of, from the move to Balanced Mix Design specifications to the implementation of Environmental Product Declarations and evaluation of new mix formulations and new technology.
6. Gov. Newsom will increasingly focus on national issues to raise his presidential aspirations
Gov. Gavin Newsom, deep into his second and final term as California’s chief executive, will increasingly focus on national issues to raise his profile in preparation for an expected run for president in 2028. The posturing will create friction between the Trump-controlled Federal Highway Administration and the Newsom-controlled California Department of Transportation.
7. Leadership changes at national organizations will impact the asphalt industry
Leadership changes at national organizations that interact with the asphalt industry in California will continue to have an impact. Staff changes as the Asphalt Institute, National Asphalt Pavement Association and the National Stone, Sand & Gravel Association will pose challenges for the organizations to communicate and coordinate on issues of mutual interest.
8. Fuel prices, and prices for asphalt, will remain relatively stable despite Middle East turmoil, foreign wars
Defying logic and economic convention, fuel prices and asphalt prices will remain fairly stable in 2025, much like they did in 2024, despite continuing conflict in the Middle East, Ukraine and elsewhere. This is largely due to the United States continuing to produce a record amount of oil, more than it consumes, creating an element of stability at home and abroad.
9. Industry consolidation continues
More industry consolidation will take place in 2025, coming on the heels of some longtime family-owned companies getting folded into national companies. At least two major acquisitions will be announced in 2024, coming on the heels of a number of major changes in 2022 and 2023 that saw longtime family-owned companies get folded into national companies.
10. High-speed rail project is derailed
After breathtaking cost overruns and design and construction delays, California’s troubled high-speed rail project will come under unprecedented assault in 2025, with elected officials and a new presidential administration questioning the project’s viability. Some of the project’s most ardent supporters will fall silent.
Honorable mention: CalAPA’s newly minted charitable arm, the California Asphalt Research & Education Foundation, will ramp up its fundraising efforts and support of activities to elevate workers, or potential workers, in the asphalt industry. Also, California’s lack of a coherent energy policy, which is leading to soaring power bills for consumers and businesses, will gain widespread attention in 2025.
And finally: Do you think there’s something important missing from this list? Feel free to drop us a line HERE with your 2025 prediction (be sure to state “2025 Prediction” in the subject line or text of your message.) The best prediction that actually comes to pass in 2025 will be eligible for a prize and recognition in this newsletter.
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