Contractors will not be immune to price increases associated with a March 8 presidential executive order banning imports of Russian oil, liquefied natural gas and coal, industry groups say.
Administration officials say the order is needed to impose further pressure on Russia’s President Vladimir Putin as the country’s forces continue to devastate Ukraine.
The order will ban new shipments of crude oil and certain petroleum products as well as the LNG and coal. It also bars new U.S. investments in Russia’s energy sector and prohibits Americans from financing or supporting foreign companies’ investments to produce energy in Russia.
To reduce the ban’s potential impact on U.S. gas prices, the administration plans to release 60 million barrels of crude oil from the Strategic Petroleum Reserve, with half that amount to be completed through an emergency sale.
Those costs will be felt by the construction industry, officials say—in the near term with higher costs for fueling construction fleets and in longer-term effects that could include a slowdown in the sector’s fragile recovery.
Associated Builders and Contractors’ chief economist Anirban Basu says contractors will not only feel the pinch in fueling trucks and equipment fleets, but also if they have fixed-price contracts that will “squeeze margins.”
Many construction materials, such as ready-mix concrete, require a lot of energy to manufacture, says Associated General Contractors’ chief economist Ken Simonson. “Contractors are vulnerable to further price increases as the various layers of the production chain try to pass on their higher costs,” he says.