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[casi] Reps: U.S. Overpaying Halliburton for Gas

Reps: U.S. Overpaying Halliburton for Gas
Wed Oct 29, 7:24 PM ET

By Susan Cornwell
WASHINGTON (Reuters) - The U.S. government is paying
Vice President Dick Cheney (news - web sites)'s former
firm Halliburton (NYSE:HAL - news) "enormous sums" --
$2.65 a gallon -- for gasoline imported into Iraq
(news - web sites) from Kuwait, two lawmakers charged
on Wednesday.

Democrats Rep. Henry Waxman of California and Rep.
John Dingell of Michigan said this gross overpayment
was made worse by the fact that the U.S. government
was turning around and reselling the gasoline in Iraq
for four to 15 cents a gallon.

In a letter of complaint sent to President Bush (news
- web sites)'s national security adviser Condoleezza
Rice (news - web sites), the two lawmakers said
experts they consulted think the cost of buying and
transporting gasoline from Kuwait into Iraq should
cost less than $1 a gallon.
The Iraqi oil company SOMO is paying only 97 cents a
gallon to import gasoline from Kuwait to Iraq, they

Waxman added in a statement: "We know that someone is
getting rich importing gasoline into Iraq. What we
don't know is who is making the money, Halliburton or
the Kuwaitis?"

Halliburton subsidiary Kellogg Brown & Root, which
defends its pricing as fair, has a contract with the
U.S. Army Corps of Engineers to rebuild Iraq's oil
sector. This has included importing oil products in
short supply as the oil-rich nation's refineries are
brought back into production.

As of Oct. 19, Halliburton had imported 61.3 million
gallons of gasoline from Kuwait into Iraq, and the
company was paid $162.5 million for an average price
of $2.65 a gallon, Waxman and Dingell wrote.

"The $2.65 per gallon is grossly excessive," they
said. "Experts we consulted stated that the total
price for buying and transporting gasoline into Iraq
should be less than $1.00 per gallon."

The U.S. government was then selling this gasoline
inside Iraq for just four to 15 cents a gallon,
subsidizing over 95 percent of the cost of gasoline
consumed by Iraqis, they said.

"The U.S. government is paying nearly three times more
for gasoline from Kuwait than it should, and then is
reselling this gasoline at a huge loss inside Iraq,"
the lawmakers wrote.

Halliburton spokeswoman Wendy Hall defended the
company against what she said were "false statements"
about its efforts in Iraq, adding that wartime work
was expensive and Halliburton only recovered "a few
cents on the dollar" for fuel costs.

"Four types of fuel are being purchased: gasoline,
kerosene, LPG and diesel," Hall said in a statement.
These fuels had different prices, she said, but gave
no details.

"It is expensive to purchase, ship and deliver fuel
into a wartime situation, especially when you are
limited by short duration contracting," she said.
"The costs for the fuel are 'pass-through' costs
because Halliburton only recovers a few cents on the
dollar for this expense," Hall said.

Cheney was Halliburton's CEO for five years before
running for vice-president in 2000.

Waxman wrote earlier this month to the White House
Office of Management and Budget to complain that
Halliburton's subsidiary was overcharging for
petroleum products, saying it was billing an average
price of $1.59 a gallon.

A Waxman spokeswoman said new information the lawmaker
has received since then was broken down into gasoline
from Turkey and gasoline from Kuwait, revealing the
price for gasoline imported from Kuwait to be much

Halliburton was charging only $1.22 per gallon to
import gasoline from Turkey into Iraq, Waxman and
Dingell said.
NB: the text of the letter of complaint can be found

See also following link:

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