Transportation impacts of energy boom not limited to road maintenance

By Bill Holloway

The booming oil and natural gas industry is bringing jobs and economic development to states across the U.S. But along with the money and jobs come lots and lots of trucks. Particularly in rural areas with historically low traffic volumes, the huge numbers of trucks—often more than 1,000 loaded truck trips per well according to the New York Department of Environmental Conservation [p. 6-302]—can rapidly degrade area roadways and strain transportation agency budgets. Many millions of additional dollars in road funding are often required to keep roads near oil and gas fields in good condition.

Texas, which has seen its industry grow dramatically in recent years and now produces 27 percent of the nation’s natural gas and over 34 percent of its oil, is grappling with road maintenance issues in the oil-and gas-rich southern and western parts of the state. In the second half of 2013, Texas directed an additional $225 million toward repairing roads damaged by industry trucks, and estimates indicate that it may need an additional $1 billion each year to keep roads used heavily by the energy sector in good condition.

However, road maintenance isn’t the only factor related to the energy boom that is increasing the cost of road infrastructure. High housing costs near booming oil and gas fields drive up costs for roadwork in those areas, while less competition between highway contractors in neighboring states is increasing costs there.

High housing costs near oil and gas fields, due to the recent influx of energy sector workers and low housing inventory, are raising costs for highway work. In North Dakota, finding and housing highway workers is a major challenge for construction companies. Rental prices have skyrocketed, with monthly rent for a trailer in some rural areas near the Bakken oil fields climbing to over $1,500. Faced with unaffordable rents, some highway workers have resorted to living in tents in state parks or commuting long distances. Highway construction companies see the housing shortage as a safety issue, since tired workers are more likely to make mistakes. Some companies are taking on a new role, providing housing for the workers themselves, with the additional costs being built into their bids.

In addition, as roads in oil and gas areas draw maintenance crews from elsewhere, other states face higher costs resulting from reduced competition among contractors. In central Minnesota, far from the nearest oil and gas fields, Kandiyohi County officials are receiving bids for highway work that are significantly exceeding estimates, sometimes by up to 68 percent. Officials attribute the higher costs to large contractors in the area that have shifted employees and equipment to work on projects in North Dakota. With less competition among construction companies, bids have risen. The higher construction costs, combined with an early start to winter in 2013, will affect 2014 road construction priorities.

Bill Holloway is a Transportation Policy Analyst at SSTI.