A builders’ trade group economist is predicting that construction costs will rise by at least 10 percent next year, but the increases will not come from higher demand created in the wake of Hurricane Katrina. Ken Simonson, chief economist for the Associated General Contractors of America, spoke at a legislative conference in Washington, D.C., drawing on first-hand accounts from the group’s member companies. He said that increased diesel fuel costs to operate off-road equipment like bulldozers and higher prices for materials made from oil and natural gas, will contribute to the increases. “Most of the increased costs in construction materials throughout the country will result from a reduction in oil and natural gas production, and not from higher demand for those materials for the reconstruction projects in devastated areas,” Simonson said. However, Simonson said, the hurricane that devastated the Gulf Coast will lead to worsening shortages and corresponding price increases for cement. The New Orleans customs district accounted for more than three percent of the nation’s cement shipments in the first half of 2005. Simonson noted that cement prices have already risen by 12.7 percent between August, 2004 and August, 2005.
