CANYON CITY – As local residents grapple with rising costs at the pumps, filling up the rigs isn’t the biggest problem for area governments.

“We use a lot of fuel, but it’s still less than 5 percent of our budget,” said Mark Hensley, Grant County Roadmaster. “It’s the non-direct costs that are killing us.”

Those costs include surcharges on materials brought into the county for road projects.

“The freight is unbelievable,” Hensley said.

A recent load of steel parts was delivered with an 11 percent surcharge to cover the cost of shipping. The surcharge is paid on top of the hourly rate charged for transportation.

“So we have to be real careful. We don’t just call for something and say, ‘Ship it.’ It’s more like ‘Next time you have a full load, then send it.'”

Hensley said the cost of materials also hammers his department, which uses a lot of steel and oil-based products. Prices have risen sharply in recent years for asphalt and chip seal materials.

Other products also take a toll. The county recently got a notice from its battery supplier, alerting customers to an 11 percent average increase on dealer and retail prices – effective Sept. 1 – to mitigate “a portion of increases in manufacturing and distribution cost.”

The notice cited the Energy Information Administration’s figures for the rise in diesel fuel, which averaged $2.87 a gallon a year ago but averages $4.56 a gallon now.

The economists say the consumer price index is up 3-5 percent, depending on the location, Hensley noted. But for specific industries, like road construction and maintenance, it’s much higher.

He said that overall, the cost of doing business for his departmen has risen 32 percent from last year.

That has forced some changes.

“We used to chip seal 30-40 miles a year,” Hensley said. The budget for such work was about $500,000 a year just a couple of years ago; now it’s closer to $250,000 spread over two years.

He said that eventually could affect the condition of the roads.

The county tries to reseal its roads every five to seven years, he said. Chip seal – a layer of crushed rock and oil – will keep the road from degrading “pretty much indefinitely” if done on a regular schedule.

However, without that maintenance, “the road slowly deterioriates,” Hensley said.

At the City of John Day, officials also see materials costs as “the most dramatic effect” of the oil situation, said city manager Peggy Gray.

The city is tackling repair projects as they arise, she said, but not looking for any new major projects.

“The total street reconstructions – That’s just not going to happen,” Gray said.

The city just received application materials for a Special Cities Allotment grant through the Oregon Department of Transportation. Gray said she checked to see if it would cover chip-seal projects, and was pleased to learn that it would. The city could receive up to $25,000 to use in 2009, if its application is approved.

“So maybe next spring, we can do some chip sealing,” she said.

For the city, coping with rising materials and fuel costs means seeking ways to hold down costs elsewhere.

Chief Richard Tirico of the John Day Police Department is now opting for cars with six-cylinder engines, rather than the V8s, when it comes time to replace a police car.

Gray said the city’s first V6 Impala is much more economical at the pumps than the old Crown Victorias purchased in the past.

In addition, Gray said the city is seeking ways to cut labor and other costs to compensate for the increases related to oil and gas.

The Oregon Department of Transportation is revamping the cost estimates for its projects as expenses continue to rise.

Tom Strandberg, ODOT spokesman, said no major maintenance projects in Grant County have been affected so far, as crews already were holding off until winter to see what their budgets will allow.

“In some cases, ODOT maintenance projects in other areas of Eastern Oregon have been postponed or scaled back to some extent,” Strandberg said. For example, a project on Oregon Highway 201 in Malheur County was reduced by several miles, and a chip seal project in Wallowa County was postponed until next year, he said.

“Overall, we are feeling the pinch, and making adjustments as needed,” he said, while keeping safety as the primary focus.

The department has contracts for the materials it uses, but they are affected by the fluctuating markets, he said.

That impact is illlustrated by the rising cost of liquid asphalt, the oil-based product that accounts for 70 percent of the materials cost in chip sealing. Strandberg said liquid asphalt was running $343 a ton at the start of 2008. In July, the cost hit $616, and the price at mid-August was $766.