The latest stage of a $12.5 million project to fix six "safety hotspots" on Otago Peninsula roads became the latest casualty this week, with work delayed - possibly until early next year - because of a $1.8 million budget shortfall.
Dunedin City Council acting manager transportation operations Pieter Besuijen blamed the budget blow-out on soaring bitumen prices fuelled by this year's oil price increases, which were being passed on to the council through the tenders process.
Bitumen prices have jumped from $400 per tonne last year to peak at $1100 per tonne in some parts of Otago this year, and Mr Besuijen said there was continuing uncertainty over prices.
"Things are really fluid at the moment," he said.
"You tell me what oil prices are going to do and I will tell you how big the problem is going to be.
"Large increases will have an impact on council budgets . . . if prices drop significantly, the opposite might be we can deal with it in the budget that's there."
Tender prices for resealing the city's roads were also up - in some cases by as much as 25% - and more headaches could be revealed next week, when the next round of tenders for some Dunedin roading projects closed, he said.
"We haven't got all the costs in yet, so I'm not 100% sure of the magnitude."
Other councils spoken to yesterday reported similar problems.
Queenstown Lakes District Council roading manager Ian Marshall said bitumen price increases came as the council made greater use of foam bitumen stabilisation, a new technique to resurface roads and prevent cracking during winter.
The technique made greater use of bitumen, and the cost increases were being felt, he said.
"It simply means we get to build a lot less road for the same amount of money, or we build the same amount of road but it costs a lot more.
"We have tried to still build the projects that we planned to build, but we have had to face the cost implications of that."
Bitumen prices had also prompted the Central Otago District Council to re-examine its management of projects and contractors, while the Clutha District Council had made cuts to its works programme to meet budgets, CDC district assets manager Jules Witt said.
However, contractors spoken to yesterday told the Otago Daily Times they were struggling too.
Delta Utilities roading services manager Kelly Broderick, of Dunedin, said bitumen prices meant "a lot of phones have stopped ringing" and companies' bottom lines could be at risk.
"Obviously, if it became a long-term thing over a couple of seasons, questions would be asked why we are still trying to do it."
Downer EDI Works coastal Otago manager Grant Sime, of Dunedin, said it was "anyone's guess" where bitumen prices were going.
They had risen with oil price increases, but had not dropped again as oil had.
"It's not really following any trends, except for an increasing one," he said.
Roading New Zealand chief executive Chris Olsen, of Wellington - whose group represents roading contractors - said the price increases were forcing some councils to defer essential maintenance.
"When councils start to defer their maintenance programme, it can result in a snowball of maintenance problems further down the line."
Dunedin's budget shortfall for work on the peninsula was first reported last month, but Mr Besuijen had hoped the work would continue while an application for more funds was made to the New Zealand Transport Agency.
However, council staff could not accept a tender for the latest section of work - on Portobello Rd between Macandrew Bay and Company Bay - until a NZTA funding decision was made, he confirmed this week.
That decision was not expected until next month, meaning work was unlikely to resume until early next year.
There was also no guarantee the council's application would be successful, he said.
"Other regional interests are all looking for the same dollars . . . I'm not making any promises at all, one way or another," he said.
