[Congressional Record Volume 149, Number 177 (Monday, December 15, 2003)]
[Extensions of Remarks]
[Pages E2557-E2558]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       IRAQ RECONSTRUCTION COSTS

                                 ______
                                 

                          HON. HENRY A. WAXMAN

                             of california

                    in the house of representatives

                       Monday, December 15, 2003

  Mr. WAXMAN. Mr. Speaker, I am inserting into the Congressional Record 
a copy of a letter we sent to National Security Advisor Condoleezza 
Rice on October 29, 2003, regarding these issues. I am also inserting 
recent data form the U.S. Army Corps of Engineers on November 17, 2003, 
providing a breakdown of Halliburton's charge of $2.64 per gallon. This 
data shows that Halliburton is charging the U.S. taxpayer $1.17 per 
gallon for fuel and $1.21 per gallon for transport, as well as $0.02 
per gallon for ``other'' charges, and $0.24 per gallon in ``markups'' 
that go directly to Halliburton.

                                     House of Representatives,

                                 Washington, DC, October 29, 2003.
     Hon. Condoleezza Rice,
     Assistant to the President for National Security Affairs, The 
         White House, Washington, DC.
       Dear Ms. Rice: We have learned that the U.S. government is 
     paying enormous sums for gasoline imported into Iraq from 
     Kuwait. We are writing to learn why this is happening and 
     what can be done to stop this waste of taxpayer dollars.
       Here are the facts:
       1. As of October 19, 2003, Halliburton has imported 
     61,304,091 gallons of gasoline from Kuwait into Iraq. 
     Halliburton has been paid $162,503,305 for this gasoline, for 
     an average price of $2.65 per gallon.
       2. The $2.65 per gallon price is grossly excessive. Experts 
     we consulted stated that the total price for buying and 
     transporting gasoline into Iraq should be less than $1.00 per 
     gallon. They estimated the price to buy gasoline in the 
     region at 71 cents per gallon, and they estimated 
     transportation costs at less than 25 cents per gallon, for a 
     total per-gallon price of about 96 cents.
       3. The Iraqi oil company, SOMO, is currently paying 97 
     cents per gallon to import gasoline from Kuwait to Iraq. Even 
     Halliburton has charged only $1.22 per gallon to import 
     gasoline from Turkey into Iraq.
       4. The gasoline imported from Kuwait is sold inside Iraq 
     for just 4 to 15 cents per gallon. Although Iraq has the 
     second richest oil reserves in the world, the U.S. government 
     is subsidizing over 95% of the cost of gasoline consumed by 
     Iraqis.
       We have heard different possible explanation for the 
     exorbitant cost of the gasoline. One is that Halliburton is 
     paying inflated prices in order to receive favorable 
     consideration for other projects. Another is that the Bush 
     Administration is responsible and, in effect, is using 
     Halliburton as a vehicle for moving funds.
       We do not know if either of these explanation is accurate. 
     But we do know that U.S. taxpayers are not getting their 
     money's worth. The U.S. government is paying nearly three 
     times more for gasoline from Kuwait than it should, and then 
     it is reselling this gasoline at a huge loss inside Iraq. 
     Whether this is due to incompetence, malfeasance, or some 
     other reason, the waste of taxpayer dollars must be 
     stopped.
       We cannot understand the refusal by the Administration to 
     respond to our previous requests for information. We have 
     written the White House twice to express our concerns about 
     how taxpayer dollars are being spent in Iraq. But the White 
     House has refused to address the matter. The signal that this 
     sends is that the Administration either has no explanation or 
     does not care about squandering taxpayer dollars.
       Three weeks ago, you were given responsibilities for 
     coordinating Iraqi reconstruction efforts. We are therefore 
     writing to you to seek answers to the following basic 
     questions:
       What is the justification for paying $2.65 per gallon to 
     import gasoline from Kuwait into Iraq?
       What is the jurisdiction for selling this gasoline for only 
     4 to 15 cents per gallon inside Iraq?

[[Page E2558]]

       Halliburton issued a subcontract to import gasoline from 
     Kuwait into Iraq that was awarded without any competition. 
     Who received the subcontract and why was the subcontract 
     awarded without competition?
       Who within the U.S. government and the Coalition 
     Provisional Authority reviewed and approved the subcontract 
     to purchase and transport the gasoline from Kuwait into Iraq?
       Did any official within the U.S. government or the 
     Coalition Provisional Authority direct Halliburton to use a 
     specific subcontractor to purchase and transport gasoline 
     from Kuwait into Iraq?
       As you know, the Administration has requested $900 million 
     for fuel imports in the latest emergency supplemental 
     request. In light of this pending request, we ask that you 
     respond to these questions immediately.
           Sincerely,
     Henry A. Waxman,
     Ranking Minority Member, Committee on Government Reform.
     John D. Dingell,
     Ranking Minority Member, Committee on Energy and Commerce.

                          The Cost of Gasoline


                                                         Price per gal.
From Turkey:
  Fuel.............................................................$.89
  Transport..........................................................22
  Other..............................................................02
  Markups............................................................11
                                                               ________
                                                               
                                                                   1.24

From Kuwait:
  Fuel............................................................$1.17
  Transport........................................................1.21
  Other..............................................................02
  Markups............................................................24
                                                               ________
                                                               
                                                                   2.64

Source: U.S. Army Corps of Engineers (November 17, 2003).

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