Even as demand for construction heated up throughout 2014, an unexpectedly steep decline in oil prices impacted the cost of nearly all construction inputs and inflation in general. The Bureau of Labor Statistics (BLS) reported on November’s inflation on December 12 and the effect of the lower price of oil was reflected throughout the data. But the data covered the time prior to the November 27 OPEC meetings, meaning that another $15 per barrel decrease had occurred by the time of the BLS report.
As of December 15, the price of oil had declined over 45 percent since June. While another 25 percent decline has occurred since the BLS survey, the impact of lower oil prices is easy to see in both the consumer price index (CPI) and in the inputs for construction. Lower oil prices mean lower gas and diesel prices, which brings down the cost of transportation and of the energy used in manufacturing.
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