Roofers ruffled as oil prices climb - Industry faces tough times as cost of key materials soar

www.msnbc.com By Melissa Francis CNBC According to the National Roofing Contractors Association, 80 percent of the products used for residential and commercial roofing are derived from oil.     March 12 —  The price of crude oil has risen to a high of over $38 a barrel in recent days, putting pressure on prices at the pump and for home heating. But there’s another industry that you might not immediately think of that’s caught between the dueling forces of a slower economy and the higher cost of materials.   YOU KNOW THAT tar paper on the roof that keeps the rain out, and the shingles and tar paste? Well, the vast majority of those products used in the roofing industry are petroleum based. And the interruption in supply from Venezuela along with the spike in oil prices is creating havoc in an industry already beaten down by a sluggish economy.        With a harsh winter, Jerry Cawley of Homestead Roofing has seen the volume of his business decline — this as the price of crude oil has spiked, significantly narrowing his margin.        “With the economy it’s been a little slow, so I don’t think the cost of the increase [in oil prices] will be passed on right away to the homeowners,” Cawley says. “I think that the small business, the roofing contractor, will have to absorb some of that cost.”        According to the National Roofing Contractors Association, 80 percent of the products used for residential and commercial roofing are derived from oil.        Climbing prices for crude, brought on by the specter of war with Iraq, have created tremendous uncertainty in an industry so dependent on the black gold, according to Bill Good of the NRCA.        “We just don’t know what the prices are going to do other than that they are just going to go up. But even more important than that, we’ve had a lot of issues of availability,” says Good. “We’ve had some spot shortages and it makes it very difficult for roofing contractors in particular to plan their work for the year.”        The uncertainty was aggravated by the strikes in Venezuela, a country where a quarter of the industry’s crude originates.        “The roofing industry relies to an unusual degree on Venezuelan crude,” says Good. “It turns out to be just a better crude oil to produce asphalt from, so the effect of the strike was really pretty devastating to our industry.”        The best substitute for Venezuelan crude is, ironically, the oil found in Iraq. An interruption in the flow from that country, or a further rise in prices, could seal the fate of many contractors.        “It has the potential to really be devastating,” says Good. “It will depend of the amount and the nature of the price increase and the availability. We’re seeing contractors getting very insecure about bidding work that is anything other than short term because they don’t want to lock into prices that may not be realistic 60-90 days from now,” he adds.