Reps: U.S. Overpaying Halliburton for Gas
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 said.
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 higher.
Halliburton was charging only $1.22 per gallon to import gasoline from Turkey into Iraq, Waxman and Dingell said.
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 said.
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 higher.
Halliburton was charging only $1.22 per gallon to import gasoline from Turkey into Iraq, Waxman and Dingell said.
