Construction material costs are expected to increase at least 10 percent next year following the destruction wrought by Hurricane Katrina, according to Associated General Contractors economist Ken Simonson.

Drawing on first-hand accounts from AGC's member companies, Simonson said, "contractors can expect increased diesel fuel costs to operate off-road equipment such as bulldozers, tower cranes and trucks. Fuel cost increases will also show up as freight surcharges on the thousands of deliveries to a typical construction job site.

"Most of the increased costs in construction materials throughout the country will result from a reduction in oil and natural gas production, and not from higher demand for those materials for the reconstruction projects in the devastated areas."

Simonson also predicted, "Lost production and imports due to the storm will result in higher prices and/or supply disruptions for PVC pipe, other construction plastics, tires for large off-road equipment, galvanized steel, gypsum products and cement."

Cement shortages, already a problem in 32 states, are expected to worsen. New Orleans was a major port for cement shipments.