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Halliburton’s “Gouging”: What Really Happened
National Review Online ^ | December 19, 2003 | Byron York

Posted on 12/19/2003 2:50:40 PM PST by Map Kernow

New details are emerging that suggest the energy giant Halliburton did not overcharge the Defense Department for fuel in Iraq — contrary to the claims of critics in Congress and in the field of Democratic presidential candidates.

The Pentagon is investigating allegations that Halliburton overcharged it by $61 million for gasoline and other fuels delivered to Iraq. Halliburton delivered gasoline to Iraq from Kuwait at a price of $2.27 per gallon, while it delivered gas from Turkey for $1.18 per gallon.

The obvious question raised by the discrepancy was: Why would Halliburton deliver high-priced fuel from Kuwait when it could be obtained at a much lower price from Turkey?

The company says it did so because the Army demanded that it deliver fuel from Kuwait. "The U.S. Army Corps of Engineers said to find a fuel source in Kuwait," Halliburton said in a press release yesterday. "[Halliburton] sought and received bids from four suppliers in Kuwait. One met the Corps' specification, and that is the one the Corps approved."

But why did the Corps specify that fuel be delivered from Kuwait? The answer appears to lie with the nature of fuel shortages that swept Iraq in the late spring. After the war, the country's oil refineries were operating far below capacity. Both gasoline and liquefied petroleum gas, which millions of Iraqis use for cooking, were in very short supply.

American officials feared that the shortages might spark civil unrest. Of particular concern was Basra, the city in southern Iraq that had seen increasingly violent expressions of popular anger against coalition forces. According to a source in the Corps of Engineers, in May, Lt. General Ricardo Sanchez, leader of American forces in Iraq, demanded that fuel be supplied to Basra — fast.

"The initial import of fuel was in response to a request from General Sanchez to do this because there was an uprising in Basra over the lack of gas and cooking fuel," says the Corps source. "Basra is near the Kuwaiti border. The fastest way to get it there is Kuwait. So we directed them [Halliburton] to do that."

"Basra was a flash point; we were close to civil unrest," the source continues. "Probably at the time we didn't care what it cost, because we were trying to stop a riot. Cost was probably not an issue."

But the rest of Iraq was suffering from fuel shortages as well. On May 8, in an article headlined, "Angry Iraqis Blame U.S. for Fuel Shortage," the Washington Post reported on a "ubiquitous scene" in Iraq: "lines that stretch toward dusty horizons as people wait for gasoline, a problem that confronts U.S. authorities with both a complex engineering challenge and a continuing threat to their prestige."

Soon the U.S. military was ordering fuel shipments to the rest of Iraq as well. While the Kuwaiti source is relatively close to Basra, it is a great distance from northern Iraq, which made for very long shipping lines. And the violent insurgency then beginning inside Iraq made the work not only expensive but also dangerous for the crews hired by Halliburton to deliver the fuel.

"Not many people want to drive eight to fifteen days through a war zone with a truck full of flammable materials," the company says. "Three drivers have been killed and many others injured while performing this mission, and 60 vehicles have been damaged."

As a result, Halliburton officials say they came up with the idea of arranging for another fuel source in Turkey. "[Halliburton] initiated the idea to source fuel from Turkey," the company says. [Halliburton] presented this idea to its customer, and because of this, saved taxpayers well over $100 million."

Since that time, fuel has come into Iraq from both sources. According to both the Corps and Halliburton, neither country can, on its own, provide the amount of fuel needed inside Iraq.

So far, Halliburton says, about two-thirds of the fuel delivered to Iraq has come from Turkey, at the lower price, and about one-third has come from Kuwait, at the higher price. Given those proportions, Halliburton says the average fuel cost from both Turkey and Kuwait has been $1.60 per gallon, "well within what auditors think it should be."

Although Halliburton's actions have been intensely criticized by the administration's opponents, the Pentagon says it has not found any wrongdoing. Said Defense Department comptroller Dov Zakheim on Tuesday, "From what I've seen so far...I have no basis whatsoever to see anything nefarious."


TOPICS: Extended News; Foreign Affairs; Government; News/Current Events; War on Terror
KEYWORDS: byronyork; corruption; democratpropaganda; halliburton; iraq; iraqioil; overcharges; rebuildingiraq
Always trust your first instinct. And my first instinct was that this "Halliburton war profiteering" story would not pan out.
1 posted on 12/19/2003 2:50:41 PM PST by Map Kernow
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To: Map Kernow
But the damage has been done. CBS ran this story with the "gouging" spin a couple of nights ago, and I would be amazed if they revisited the story with a retraction.
2 posted on 12/19/2003 2:53:21 PM PST by Steve_Seattle ("Above all, shake your bum at Burton.")
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To: Map Kernow
uh...Headline should read..."VP Dick Cheney's former company, Halliburton....."

Sheesh...let's get it right people!

3 posted on 12/19/2003 2:53:49 PM PST by Jerry Attrick
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To: Map Kernow
So where did this begin?

"Halliburton overcharging to import gasoline in Iraq, two Democrats charge" - pushed by militants at Associated Press

4 posted on 12/19/2003 2:54:39 PM PST by Diogenesis (If you mess with one of us, you mess with all of us)
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To: Map Kernow
Of course, unlike the "Halliburton is war profiteering" story, this one will be found (if at all) on page 15A, in small print.

Worse yet, again unlike the previous story, it won't make the networks' radio and TV news broadcasts at all.

5 posted on 12/19/2003 2:56:17 PM PST by newgeezer (Just my opinion, of course. Your mileage may vary. You have the right to be wrong.)
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To: Map Kernow
I just got an email from a writer for the Seattle P.I. (ultra-liberal), claiming that the press has given Bush a "free-ride." Laughable . . .
6 posted on 12/19/2003 2:57:17 PM PST by Steve_Seattle ("Above all, shake your bum at Burton.")
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To: Diogenesis
militants at Associated Press

I love that.

7 posted on 12/19/2003 3:05:50 PM PST by vbmoneyspender
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To: newgeezer
"Worse yet, again unlike the previous story, it won't make the networks' radio and TV news broadcasts at all."

"This is the CBS Evening News and I'm Dan Rather. Today, Defense Department auditors announced there is no evidence to support Democratic allegations that the Halliburton Corporation engaged in price-gouging on the sale of gasoline in Iraq. Auditors called the allegations of Halliburton "war profiteering" to be unfounded, and that Halliburton's purchasing strategy had in fact saved American taxpayers upwards of $100 million dollars. In other news . . ."

bzzzzzzzzz . . . alarm clock goes off . . . dream ends
8 posted on 12/19/2003 3:07:29 PM PST by Steve_Seattle ("Above all, shake your bum at Burton.")
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To: Map Kernow
Halliburton delivered gasoline to Iraq from Kuwait at a price of $2.27 per gallon, while it delivered gas from Turkey for $1.18 per gallon.

In a war zone, you're lucky if you get gas, period. I'll wager there are FReepers here that have been on a FTX and ran out of gas, or in a convoy (Track, jeep, deuce and half), and couldn't
find POL. Unfortunately, for hours.

Sheesh, the average gas price of $1.60 is lower than in Kalifornia. It' a war zone for crying out loud!

< /Rant>

5.56mm

9 posted on 12/19/2003 3:10:25 PM PST by M Kehoe
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To: vbmoneyspender
Haliburton has been doing work for the army since WW II. From the newspaper, one would think that it slid in under some wire.

Just another phony Dem attack. Nothing new!!

10 posted on 12/19/2003 3:15:14 PM PST by Sacajaweau (God Bless Our Troops!!)
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To: Diogenesis
Henry Waxman and John Dingle! How could anyone print their views as credible. The press was secretive about their source.
Had it been known the story would've been blown off as fiction.
11 posted on 12/19/2003 3:41:35 PM PST by ChiMark
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To: Map Kernow
read later
12 posted on 12/19/2003 3:53:36 PM PST by LiteKeeper
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To: Map Kernow
Byron York is the best of the best alive. They guy should do a Danishh clogdance on his way to the podium to grab his Pulitzer. Fat chance. They'll give another one to Friedman.

13 posted on 12/19/2003 4:43:53 PM PST by ArneFufkin
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BTTT
14 posted on 12/19/2003 5:02:47 PM PST by sarasmom (Message to the DOD : Very good , troops.Carry on. IN MY NAME)
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To: M Kehoe
In a war zone, you're lucky if you get gas, period. I'll wager there are FReepers here that have been on a FTX and ran out of gas, or in a convoy (Track, jeep, deuce and half), and couldn't find POL. Unfortunately, for hours.

Reminds me of that memorable scene in the 1970 movie Patton where an American tank column runs out of gas just as it runs head on into a German Panzer column. People who sit in nice, warm, safe newspaper offices, TV studios and Congressional offices don't have to consider---and maybe never have had to consider---what could happen if a convoy does run out of gas.

15 posted on 12/19/2003 5:03:18 PM PST by Map Kernow ("A liberal is someone who won't take his own side in a dispute" ---Robert Frost)
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To: Map Kernow
Thank you for finding this and posting it.
16 posted on 12/19/2003 5:03:52 PM PST by Grampa Dave (George $orea$$ has owned and controlled the Rats for decades!)
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To: Miss Marple; Howlin; BOBTHENAILER; JohnHuang2; Ernest_at_the_Beach; nopardons
More lies by the left wing media get smashed.
17 posted on 12/19/2003 5:06:25 PM PST by Grampa Dave (George $orea$$ has owned and controlled the Rats for decades!)
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To: Steve_Seattle
Actually CBS continues to fan the flames

WTOP - a CBS news radio station in DC was running a lead story today about how Halliburton, VP Dick Cheney's former company, has grabbed the only copy of the audit report that was the source of the pricing information and refuses to hand it over. The guy who originally broke the report failed to make a copy. Apparently the very information that triggered this "news event" came from a Halliburton internal audit that nobody on the outside had a right to look at in the first place. Halliburton has suggested that whomever leaked the info may have broken the law by simply reading the report.

CBS radio was spinning this as a scandalous cover-up this afternoon. Far from retraction they're gonna drag as much innuendo out of this as they possibly can.
18 posted on 12/19/2003 5:13:38 PM PST by cdrw (Freedom and responsibility are inseparable)
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To: Map Kernow
I'm sure molly ivens will now retract all her anti-haliburton hate speech and admit she's a lying drunken sow. Right?
19 posted on 12/19/2003 8:23:40 PM PST by ozzymandus
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To: ozzymandus
Molly Ivins....UGLY drunken VICIOUS sow....you forgot these worthy adjectives.
20 posted on 12/19/2003 9:34:25 PM PST by Ann Archy
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To: ozzymandus
I'm sure molly ivens will now retract all her anti-haliburton hate speech and admit she's a lying drunken sow. Right?

[Imitating her faux 'good ol' girl' mannerisms] 'T'ain't good enough fer me. She gotta CRAWL INTER a SOW BELLY and STAY THERE!!! ;-)

21 posted on 12/19/2003 10:01:10 PM PST by Map Kernow ("A liberal is someone who won't take his own side in a dispute" ---Robert Frost)
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