Democrats Blast Halliburton for Gas Costs

Democratic lawmakers released a letter from Iraq's national oil company Tuesday confirming it pays far less to import gasoline than Halliburton (search), the Texas contractor that buys petroleum goods for Iraqis with U.S. government money.

Halliburton said it has no choice but to charge more, since its contract with the U.S. Army Corps of Engineers (search) requires only short-term deals.

Iraq's State Oil Marketing Organization said it pays between 90 and 98 cents per gallon to buy oil from neighboring countries and transport it to different locations in Iraq.

Halliburton charges the government $1.59 and then receives a markup that could boost the price to $1.62 to $1.70, according to Democratic Reps. Henry Waxman (search) of California and John Dingell (search) of Michigan, who released information supplied by the Iraqi company.

Waxman and Dingell have persistently criticized Halliburton's role in Iraq, contending it is gouging the U.S. Treasury while earning profits from a no-bid contract to restore the country's oil industry.

Vice President Dick Cheney formerly headed the company, whose KBR subsidiary has earned $1.59 billion so far in the Iraq oil contract. The Army Corps of Engineers said it soon will replace the Halliburton contract with two contracts awarded through competitive bidding.

Halliburton spokeswoman Wendy Hall said in a written statement that KBR's costs are higher because the company's contracts for gasoline, transportation, depot storage or labor cannot last longer than 30 days.

"Simple economics dictate that companies who are not bound by these guidelines, and are able to negotiate price on a long-term contract basis, can negotiate lower prices," the statement said.

She added, "Based on the entire picture, to allege that KBR is overcharging for this needed service insults the KBR employees who are performing this dangerous mission to help bring fuel to the people of Iraq."

Hall added that the company's 2 percent add-on fee is less than the markup for products at a local gas station or supermarket.

The letter from the Iraqi company, which included a price list, was signed by general manager Mohammed M. Al-Jibouri. The list said the price of gasoline from next-door Turkey was about 98 cents a gallon, and other prices were as low as 90 cents, depending on the gasoline's point of origin and where in Iraq it was delivered.

Waxman and Dingell said in a letter to the Corps of Engineers that some of the money paid to Halliburton is from the Development Fund for Iraq (search). That is the successor to the Oil for Food Program (search), which the United Nations set up for humanitarian reasons during the dozen years Iraq was under international sanctions for failing to carry out U.N. resolutions.

The lawmakers contended that money from the fund has been "squandered by paying inflated prices to Halliburton."

Waxman and Dingell asked the Corps to investigate whether Halliburton was overcharging U.S. taxpayers, to seek reimbursement for any inflated amounts and, if overcharges should be confirmed, to disqualify Halliburton from the planned replacement contracts.

Robert Faletti, a Corps spokesman, said the Halliburton contract is audited continuously, and no problems have been uncovered.

"If they are overcharging, we will take appropriate action," he said.

Faletti also confirmed that the humanitarian fund is used to help pay for the oil imports, but said this was a decision by the U.S.-run reconstruction authority.

Meanwhile, the U.S. Agency for International Development (search) awarded, through competitive bidding, a $36.9 million contract to revitalize Iraq's agriculture. Development Alternatives Inc. (search), of Bethesda, Md., was hired for the one-year project.

USAID has also been criticized by lawmakers for awarding its initial Iraq recovery contracts without competition. The agency said there wasn't enough time for competitive bidding to meet Iraq's emergency needs.