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The high price of gasoline for Iraq

/ Source: NBC News

There is controversy over importing gasoline into Iraq — a subject that seems pretty surprising since Iraq is sitting on one of the world’s largest oil reserves. But Iraq needs large amounts of gas to be brought in, and that has led to accusations that the contractor selected to do the job, Halliburton, is charging way too much.

ON THE STREETS of Baghdad a desperate search for a precious commodity — gasoline. One man says he waited in line five hours but the pump ran dry forcing him and countless others to rely on the roadside black market.

The job of solving Iraq’s gasoline shortage and fixing its shattered oil infrastructure was awarded, without competitive bidding to Halliburton, the company once headed by Vice President Dick Cheney.

Until Iraq can meet its own fuel needs, Halliburton is trucking in gasoline from Iraq’s neighbors, including Kuwait.

“Halliburton has been given a blank check.” But, there’s a big problem, according to Democratic Congressman Henry Waxman. He says the price Halliburton is paying Kuwait for gas is “grossly excessive.”

According to the Army Corps of Engineers Halliburton is paying Kuwait $2.65 a gallon while an Iraqi oil agency is paying only about a dollar a gallon.

“They don’t care about cost containment or holding down expenses because they know the U.S. taxpayers will pick up the cost,” said Waxman.

And, at Baghdad gas stations the price is just 15 cents a gallon or less. Mohammed al-Jibouri, an Iraqi oil official, says he can get a lower price, in part, because of experience. “We know the people and we know the companies so we can get a better deal.” Whatever the reason, Waxman claims Halliburton has wasted at least a $100 million of U.S. taxpayer money.

Halliburton turned down an NBC News request for an interview, but in a written statement says any allegation that it is intentionally overpaying Kuwait is “untrue, unfair and unwarranted.” And, defending its pricing, Halliburton adds: “It is expensive to purchase, ship, and deliver fuel into a wartime situation especially when you are limited by short duration contracting” as the government requires.

But oil analyst Philip Verleger, who agrees with Waxman that Halliburton has a conflict of interest with Kuwait says $2.65 a gallon for Kuwaiti gasoline is “outrageous.” “It’s as if they put the gasoline on the Queen Mary and taken it around the globe before they deliver it.”

Late Wednesday, the U.S. Army Corps of Engineers told NBC News it is considering taking away from Halliburton the job of importing Iraq’s gasoline and giving it to the Defense Department. But officials insist the reason is the long-term duration of the project and does not indicate any dissatisfaction with Halliburton’s performance.