Corps commander clears Halliburton in gas price controversy

| 1/7/2004

Halliburton has been cleared by Lt. Gen. Robert Flowers, the commander of the Army Corps of Engineers, in a scandal that involved accusations of overcharges by the Texas-based company, The Wall Street Journal reported.

Flowers took the action, called a waiver, Dec. 19, but it was not disclosed or reported on by media outlets until Jan. 6. The action relieves the firm from the need to provide information that would justify its oil prices.

In early December, The New York Times, quoting “government documents,” said the company and its Kellogg Brown & Root subsidiary, which administers the contract, were charging the U.S. government an average of $2.64 a gallon to import gasoline and other fuel to Iraq from Kuwait, more than twice what others are paying to truck in Kuwaiti fuel.

A spokeswoman for Halliburton, Wendy Hall, defended the company's pricing at that time.

"It is expensive to purchase, ship and deliver fuel into a wartime situation, especially when you are limited by short-duration contracting," she said.

The cost of the imported fuel first came to public attention in October when two senior Democrats in Congress criticized Halliburton, the huge Houston-based oil-field services company, for "inflating gasoline prices at a great cost to American taxpayers."

Flowers decision to clear the company came in the wake of a Corps memo that said KBR showed through data it had charged a "fair and reasonable price." However, The Journal reported, his decision could undermine an audit by Pentagon officials that is now under way. 

However, it will not stop Halliburton from losing much if not all of its oil business in Iraq. That’s because the Pentagon had already decided in late December to remove the Houston company from providing gasoline to Iraq and turn the duty over to the Defense Energy Support Center, which buys the military’s fuel all over the world, The Associated Press reported Dec. 31.

The controversy has become the political football of the season, with Democrats leading the way in criticizing Halliburton, which was formerly lead by Vice President Dick Cheney.

A number of American owner-operators and OOIDA members are working overseas for Kellogg Brown & Root, and many truckers have called OOIDA asking for contact information for the company.