As soon as President elect Obama began to float his ideas of economic stimulus by means of public works among other proposals, many savvy investors began to seek out investments that would benefit from such a plan.  The details of Mr. Obama’s stimulus measures are still being debated, but there is little doubt that public works and massive infrastructure spending will be one major platform.  It was soon after such pronouncements that we wrote a blog on the potential of construction materials firm Vulcan Materials (VMC) in Stock! Are You Out of Your Vulcan Mind? and since that time the stock has vaulted up by more than a third.  Vulcan is not alone in its stellar performance of late as many of the so called “Obama infrastructure plays” have enjoyed quite a bit of momentum.

One of my esteemed colleagues here at Ockham called to my attention an interesting NPR report.  The story detailed one of the more volatile commodities that is sure to be a major part of the proposed stimuli: asphalt.  Most if not all major road upcoming projects will be made of asphalt with the state of New Jersey alone accounting for potentially $300 million worth of “shovel ready” paving projects on tap according to NJDOT.  There is a growing concern that a shortage of the petroleum based product is an inevitability.

Obviously, for a petroleum derivative, the price of crude has great influence over the asphalt prices.  Asphalt is made from the heavy stuff near the bottom of a barrel of crude, so as crude becomes more valuable, producers make every effort to squeeze as much as possible out of the barrel.  However, with the increased demand for asphalt it may be beneficial for producers to put more emphasis on asphalt.  Ben Teplitz, an industry analyst says this decision makes financial sense as well,

“The last time I checked, it did not pay to make gasoline, but it paid to make asphalt.