Editore"s Note
Tilting at Windmills

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December 10, 2003
By: Kevin Drum

YOUR $18 BILLION AT WORK....Coals to Newcastle? Refrigerators to eskimos? Gasoline to Iraq?

I know, I know, Iraq's infrastructure is busted and it actually makes sense that we have to import gasoline into the country. Fine. But how much should it cost? Here's a couple of data points:

Iraqi's state oil company, SOMO, pays 96 cents a gallon to bring in gas, which includes the cost of gasoline and transportation costs....

The Pentagon's Defense Energy Support Center pays $1.08 to $1.19 per gallon for the gas it imports from Kuwait, Congressional aides said. That includes the price of the gas and its transportation costs.

OK, so the Iraqis can do it for 96 cents, and the army can do it for about $1.08. So how much can our friends at Halliburton do it for?

A breakdown of fuel costs, contained in Army Corps documents recently provided to Democratic Congressional investigators and shared with The New York Times, shows that Halliburton is charging $2.64 for a gallon of fuel it imports from Kuwait and $1.24 per gallon for fuel from Turkey.

....The government's accounting shows that Halliburton paid its Kuwait subcontractor $1.17 a gallon, when it was selling for 71 cents a gallon wholesale in the Middle East.

In addition, Halliburton is paying $1.21 a gallon to transport the fuel an estimated 400 miles from Kuwait to Iraq, the documents show.

Add in a 26 cent markup which one expert says is a profit margin that any oil services company in the world would "salivate" over and you get $2.64.

Why so much? The Halliburton flacks say their costs are high because it's really dangerous to import gasoline into Iraq right now, trucks get shot up, drivers are injured, yadda yadda yadda.

Fine, I'll buy that. But surely SOMO's trucks and the army's trucks are getting shot up too? Yep: "The gasoline transported by SOMO and by Halliburton's subcontractor are delivered to the same depots in Iraq and often use the same military escorts."

So why the difference? Can you spell "war profiteering"?

(Thanks to Unfogged for pointing me to this story.)

Kevin Drum 8:45 PM Permalink | Trackbacks

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