Dems: Halliburton Overcharging for Gas

[zimv20]

link (http://www.newsday.com/news/politics/wire/sns-ap-halliburton-iraq,0,3894769,print.story?coll=sns-ap-politics-headlines)


By LARRY MARGASAK
Associated Press Writer

October 15, 2003, 6:48 PM EDT

WASHINGTON -- Halliburton, the Houston company with a no-bid contract to restore Iraq's oil industry, is charging U.S. taxpayers exorbitant prices to import gasoline into Iraq, two Democratic congressmen said Wednesday.

Reps. Henry Waxman, D-Calif., and John Dingell, D-Mich., wrote the Bush administration that the company's KBR subsidiary is billing the Army between $1.62 and $1.70 per gallon, while Iraqis are charged between 4 cents and 15 cents at the pump.

"Although Iraq has the second largest oil reserves in the world, the U.S. taxpayer is, in effect, subsidizing over 90 percent of the cost of gasoline sold in Iraq," the lawmakers said in the latest Democratic attacks against the company formerly led by Vice President Dick Cheney.

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[Inu]

Guess what: As soon as the oil flows the other way, you will be subsiding it again...

At least thats what i would bet on, if there was a bet

[Desertrat]

At least the Iraqis aren't getting shafted. It would be interesting to learn just how they arrive at the pricing to supply the Army.

If the source is a refinery in Kuwait or Saudi Arabia, I'd think a fair market price would be in the $0.25 to $0.40 range. FOB refinery plus transport plus distribution. Distribution is probably the biggest add-on cost.

It's frustrating. "Sutlers" have been screwing the government (we taxpayers) on the quality and/or pricing of military supplies since Roman times, if not even before then. No matter how much the griping, no government seems to have ever been able to solve the problem.

There are a lot of Waxman's ideas I don't like, but I'm with him on this one...

'Rat

[pseudobrit]

They have the oil but we're paying for their gas so they don't have to?

What the hell? This administration's twisted mess of existence never ceases to astonish me.

[Desertrat]

pseudobrit, in order that there be internal business and trade within Iraq, and in order that people get to work, there must be fuel for transportation. The pay scales are low. We don't know what an Iraqi had to pay for gasoline before the invasion; six cents per gallon may have been the price, and we're just making it possible for them to continue on as before. I have no quick and easy way of knowing.

One way of looking at it is that we screwed up their system worse than it already was; cheap gas for Iraqis might be a form of redress. I dunno.

I realize the cost relationships aren't linear, but in the US (without taxes), $30/bbl oil means $1.00/gallon gasoline (wholesale). Kuwaiti and Saudi oil cost to them is, what, a buck a barrel? (In about 1980, a newpaper article showed all the various costs involved in the route from crude oil to gasoline. The cost to the Saudis was $0.17 per barrel. Yeah, that's seventeen cents.)

'Rat

'Rat

[pseudobrit]

I guess the main question is why we are importing gasoline into an oil nation, and why Halliburton is charging as much to the taxpayer as California CARB gas costs?

It simply cannot cost that much to get cheap oil into Iraq, unless they're insisting on using Bush branded Texas tea exclusively. Which just might be the problem.

[Desertrat]

pseudobrit, isn't part of Halli's deal to get the Iraqi refineries back on line? I've read that there has been some degree of success. However, isn't it possible that the demand exceeds the present in-country supply capability?

I can speculate, but I don't have enough info to make any absolute statements...

'Rat

[pseudobrit]

Originally posted by Desertrat
However, isn't it possible that the demand exceeds the present in-country supply capability?

I highly doubt it. Saudi Arabia is next door and their oil is cheap (especially to another OPEC nation). Halliburton is either refusing to buy oil locally or it is in fact buying locally and overcharging the taxpayer.

[Desertrat]

Oh, well...Speculation.

:), 'Rat