Gas is now cheaper, why not shingles?
From: Charles Griffiths, President:
Date: 11/17/08
GAF just announced another price increase effective today. I had trouble
with this one because the original justification for the dramatic shingle price
increases, which was the rapid increase in the cost of a barrel of oil earlier
this year, seems to have disappeared. A barrel of oil now is less than
half what is was in July and gas prices at the pumps seem to be the lowest
they've been in many years.
SO WHAT'S GOING ON?
I did some research and here's what I found:
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Asphalt comes from the "junk" that's left over from the processing of a barrel
of crude oil.
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Oil companies make their money on the stuff that burns, not the stuff that sits
on our roads & roofs.
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Refineries have figured out how to get more of the stuff that burns out of a
barrel of oil than they ever did before.
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The way the refiners do this is to install "Cokers" on their refineries.
The oil crisis has been a major incentive to install these Cokers.
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With less sophisticated refineries, 40% of a barrel of oil would become asphalt
products
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Now, only 10% of a barrel becomes asphalt.
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The supply of additives mixed with asphalt to make them more durable has also
become more scarce.
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As a result, asphalt will continue to be scarce which means asphalt pricing will
be high for foreseeable future.
GAF has summarized the situation well in this document. Click on it to
read it.
GAF - Asphalt Pricing - The
Simple Version
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