Thursday, November 06, 2003

Gas Prices to Decline - in Iraq

From this morning's Wall Street Journal:

The Army Corps of Engineers will be terminating Halliburton subsidiary KBR's no-bid contract for fuel in Iraq. The Corps has spent over $6 million per day in fuel costs under the plan where KBR was charging around $2.69/gallon to the government. The spot price for gas in the Gulf area is around $0.65/gallon.

Wendy Hall, a spokeswoman for Halliburton, says the company only recovers "a few cents on the dollar" for the importing of fuel into Iraq. "It is expensive to purchase, ship and deliver fuel into a wartime situation, especially when you are limited by short-duration contracting," she said. "It is not as simple as dropping by a service station for a fill-up."
However, enterprising Iraqis are importing fuel from neighboring states and selling - for a profit - in the $0.75/gallon range. Something's not adding up here - other than Halliburton's profits.

No comments: