Rising Fuel and Materials Costs Weigh on Construction Profitability

Rising diesel and construction material costs are increasing pressure on contractor margins, as global energy disruptions ripple through the construction sector, ConstructConnect reported (3-26-26).

According to AAA data, diesel prices climbed to a US national average of $5.29 per gallon, up 42.3% from a month earlier, amid supply disruptions tied to the ongoing Iran conflict and reduced flows through the Strait of Hormuz. The increase has put prices above $5 for the first since December 2022.

Higher fuel costs are compounding existing pressures from building materials. The BLS Producer Price Index shows construction material prices reached levels last seen in 2022 in February.

Construction firms, which rely heavily on diesel for transportation and equipment, are facing rising operating costs that are tightening project margins, straining cash flow, and influencing future bids. ConstructConnect said that sustained input cost increases, without relief, could put significant pressure on profitability across the sector.