November 22, 2017
AggMan understands that the aggregates business is made up of local businesses throughout the nation. As such, we are focused on providing insights into these local markets, as well as national markets, in print and online.
We contacted Jim Rodriguez, executive director of the Oklahoma Aggregates Association (OKAA), who was kind enough to give his take on what’s happening with the aggregates industry in the state of Oklahoma.
1. How would you characterize the state of the aggregates market in Oklahoma?
Rodriguez: The market is moderately strong. 2016 saw the highest production in nearly 10 years. Segments which contributed most to this production included Oklahoma Department of Highways construction, Oklahoma Turnpike construction, commercial construction, and small increases in Oil & Gas Production activity. Production in 2017 has been off slightly, but remains fairly strong. Commercial construction and energy production activities continue to grow at a moderate pace, but public works spending is trending down slightly. On the regulatory front, the Aggregates Industry has faced increasing opposition from special environmental interest groups during agency Rulemaking Activity and Producer Company Permitting processing.
2. How is Oklahoma addressing transportation funding?
Rodriguez: Not very effectively. From 2006 through 2014, funding for transportation grew steadily due to an aggressive program to fund Oklahoma’s Eight Year Highway Construction Industry from General Revenues. These were very “Fat Years” for Oklahoma General Revenues due primarily to record Oil & Gas Production. Gross Production Taxes from this industry meant that the state was awash in cash. Two bad developments followed. First, the State Legislature made dramatic cuts in Gross Production Tax Rates and the Oil & Gas Market collapsed. The Legislature has responded with significant reductions in State and County Highway Construction Funding. The Legislature has resisted efforts to increase revenue. Oklahoma has the second lowest gas and diesel tax in the nation. This cents per gallon tax has not been increased since 1987. This tax has lost over half its buying power in the 30 years since.
3. What are the big opportunities for producers in Oklahoma (DOT projects, commercial construction, etc.)?
Rodriguez: The Oklahoma Turnpike Authority have several major reconstruction and lane addition projects underway. The oil and gas industry future looks excellent for the next five to 10 years, which will add new demand for our products. Commercial and home construction forecasts look strong.
4. What are the big obstacles for producers in Oklahoma (legislation, neighborhood groups, etc.)?
Rodriguez: The biggest obstacle is the Oklahoma State Legislature, which refuses to accept responsibility for highway transportation funding. Several years back, the people of Oklahoma passed a Constitutional Amendment requiring a two-thirds majority vote for any new Revenue Measures. Despite the fact that all major highway user groups are asking for an increase in fuel taxes to support highway infrastructure requirements, the legislature cannot muster enough votes to add any new revenue to state government.
5. What would you like your peers to know about aggregates production in Oklahoma?
Rodriguez: Despite funding issues at the state level, the Oklahoma Aggregates Industry is continuing to grow and prosper. Oklahoma producing company exports a large proportion of its production for construction activities in neighboring states. The industry is taking important steps to help secure a strong workforce for the future. It is fostering its ties to Oklahoma Universities and Vocational Training Schools. It is also reaching out to the general public to create new relationships based on shared interest and values.