Fuel costs are creeping back into every civils job on the road

Diesel prices reaching £2 a litre could add nearly £600m to the infrastructure sector’s annualised fuel bill, with plant-heavy civils firms among those facing the sharpest pressure.

Fuel costs have moved back into focus for construction firms after diesel prices reached £2 a litre. Construction Enquirer reports that the rise since January could increase the infrastructure sector’s annualised fuel bill by around £590m.

In brief:

• Diesel has risen from around £1.41 a litre in January to £2, according to Construction Enquirer.
• The reported increase represents an estimated annualised £590m rise in the infrastructure sector’s fuel bill.
• Plant-heavy civils firms are particularly exposed, with one contractor warning that higher costs are squeezing already tight margins.

Diesel at £2 a litre adds pressure to civils contractors

The estimate is based on the infrastructure sector using more than one billion litres of diesel a year. Construction Enquirer describes the £590m figure as a theoretical annualised increase, rather than a tally of costs already incurred across the industry.

The impact is likely to be especially pronounced for businesses that rely heavily on plant. The report says diesel can account for around 15% of turnover at muckshifting contractors. It estimates that fuelling a typical 20-tonne excavator now costs £880 to £1,000 a week, compared with roughly £620 to £705 at the start of the year.

A civils contractor told Construction Enquirer the increase was landing at a difficult time, with margins already under pressure. The report also quotes the Construction Plant-Hire Association’s chief executive, Steve Mulholland, calling for an extension of the 5p fuel duty cut and a targeted reduction for commercial and off-road diesel.

For highways contractors, the figures underline how exposed roadworks can be to fuel prices. Diesel is used by construction plant, generators and vehicles moving workers and materials. Construction Enquirer cites research from BAM sites indicating that around two-thirds of construction diesel is used by plant, with most of the remainder going to generators for site power, lighting and heating.

The report does not say that specific highways schemes have been delayed, cancelled or repriced because of the increase. But where work depends on fuel-intensive plant and haulage, a sustained rise adds cost pressure for contractors already working to tight margins. How much of that pressure is absorbed by firms or reflected in project costs will depend on individual contracts.

It has also been reported that the UK has an estimated 25,000 to 30,000 operated diesel-powered construction machines weighing more than five tonnes, with excavators making up more than half the fleet. It quotes a University of Salford supply-chain expert warning businesses to prepare for the possibility of diesel reaching £3 a litre. That is a scenario, not a forecast.