Team Infidel
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San Diego Union-Tribune
April 3, 2008
Pg. 1
Prices in oil-rich war zone leave lawmakers fuming
By Anne Flaherty, Associated Press
WASHINGTON – Think you're being gouged by Big Oil? U.S. troops in Iraq are paying almost as much as Americans back home, despite burning fuel at staggering rates in a war to stabilize a country known for its oil reserves.
Military units pay an average of $3.23 a gallon for gasoline, diesel and jet fuel, about $88 a day per service member in Iraq, according to an Associated Press review and interviews with defense officials. A penny or two increase in the price of fuel can add millions of dollars to U.S. costs.
Critics in Congress are fuming. They say the United States is getting suckered as the cost of the war exceeds a half-trillion dollars – $10.3 billion a month, according to the Congressional Research Service.
Some lawmakers say oil-rich allies in the Middle East should be doing more to subsidize fuel costs because of the stake they have in a secure Iraq. Others point to Iraq's own burgeoning surplus as crude oil prices top $100 a barrel. Baghdad subsidies let Iraqis pay $1.36 a gallon.
The U.S. military, through its Defense Energy Support Center, buys fuel on the open market, paying from $1.99 a gallon to as much as $5.30 a gallon under contracts with private and government-owned oil companies.
The center then sets a fixed rate for troops, currently $3.51 a gallon for diesel; $3.15 for gasoline; $3.04 for jet fuel; and $13.61 for avgas, a high-octane fuel used mostly in unmanned aerial vehicles.
Kuwait does grant substantial subsidies, but they cover only about half the fuel used by the United States in Iraq. The discount is eaten up by the Defense Energy Support Center's administrative costs and market fluctuations.
Overall, the military consumes about 1.2 million barrels, or more than 50 million gallons of fuel, each month in Iraq at an average $127.68 a barrel. That works out to about $153 million a month.
Historically, these figures are astounding. In World War II, the average fuel consumption per soldier or Marine was about 1.67 gallons per day; in Iraq, it is 27.3 gallons, according to briefing slides prepared by a Pentagon task force established to review consumption.
The surge in demand can be attributed in part to the military's expanding aviation fleet, including helicopters, and its reliance on planes to shuttle cargo and troops between the United States and Iraq. Vehicles, too, are more heavily armored and require more energy to run. Another major contributor is the widespread use of generators to cool troops.
Still, some lawmakers say the United States is paying too much to secure an oil-rich nation that resides in a region swimming in the natural resource.
Rep. Gene Taylor, D-Miss., a member of the House Armed Services Committee, said he was shocked last December to watch U.S. troops in Kuwait filling diesel tanks at higher prices than he would have paid to fill up his boat in Mississippi.
“The Kuwaitis have been good allies. But let's face it, that nation would not be there if not for the American liberation of Kuwait,” Taylor said, referring to the 1991 war.
When Taylor pressed Pentagon and Embassy officials on the matter, he was told Kuwait was offering a discount.
Unlike other oil-rich allies, Kuwait is estimated to have saved the U.S. government $1.2 billion in four years, from 2002 to 2006, U.S. Embassy officials told Taylor in a Jan.3 letter.
Under the current agreement, the Kuwait-owned company supplies 7,000 gallons per day of free fuel to U.S. forces operating inside Kuwait. For troops in Iraq, Kuwait offers 860,000 gallons of jet fuel a day at less than half the market price. This discounted fuel represents more than half the fuel the United States uses in Iraq each day.
The rest of the fuel – about 100,000 to 200,000 gallons a day – is sold to the U.S. military at market rate.
When Taylor asked whether more could be done by Kuwait and other oil-rich allies in the Middle East, a senior Pentagon official said the United States wants to see an even bigger reduction in prices from Kuwait but indicated there was no guarantee that would happen.
“It is our view that all of those forces, whether they are semi-stationed in Kuwait ... or those transitioning into Iraq, should receive that fuel at a reduced rate, and that is continuing dialogue that goes on between our government and the government of Kuwait,” Mark Kimmitt, deputy assistant secretary of defense for the Middle East, said in a January hearing.
It is unlikely that the United States has pressed Saudi Arabia, Qatar or other oil-rich allies recently to help subsidize the cost of fuel in Iraq. The Defense Department referred questions about such negotiations to the State Department, where a spokesman said the agency was not aware of any.
Rep. Roscoe Bartlett, R-Md., also a member of the Armed Services Committee and a vocal advocate pushing the military to pursue alternative energy solutions, said he doubts such talks would be fruitful anyway, because of the impression by many in the Middle East that the United States invaded Iraq for its oil.
“I'm not sure they're as convinced we're fighting for them, as they were in the first Gulf war,” Bartlett said.
He hopes instead that the war will spur military development of hybrid technologies and alternative fuels at a time when private companies are lacking the financial incentive.
So far, the price of oil hasn't restricted combat operations, but it has inspired the military to hunt for new ways to conserve energy.
Development of more energy-efficient equipment will take time. Former CIA Director James Woolsey, who was co-chairman of a policy panel on the Pentagon energy study, said operations in Iraq and elsewhere are forcing the military to take the burden of fuel costs more seriously.
“The combination of $100-a-barrel oil and the terrorist situation and the dependence on the Middle East are really ... waking them up very fast,” Woolsey said.
In the meantime, other lawmakers say they want to see the high costs of the war defrayed by Iraq's dipping into its own oil revenues, which are projected to be substantial. Independent auditors estimate that Iraq is headed this year toward a massive surplus because of as much as $60 billion in oil revenues – a consequence of increased production paired with the sharp rise in prices.
“It's totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues,” said Sen. Carl Levin, D-Mich., chairman of the Armed Services Committee. “It doesn't compute, as far as I'm concerned.”
Administration and military officials say Baghdad hasn't been able to spend its oil revenues so far because the newly formed government is still learning how to manage its revenues.
They say Iraq's lack of spending isn't because of corruption or laziness, but rather Baghdad's inability to determine where its money is needed most and how best to allocate it.
April 3, 2008
Pg. 1
Prices in oil-rich war zone leave lawmakers fuming
By Anne Flaherty, Associated Press
WASHINGTON – Think you're being gouged by Big Oil? U.S. troops in Iraq are paying almost as much as Americans back home, despite burning fuel at staggering rates in a war to stabilize a country known for its oil reserves.
Military units pay an average of $3.23 a gallon for gasoline, diesel and jet fuel, about $88 a day per service member in Iraq, according to an Associated Press review and interviews with defense officials. A penny or two increase in the price of fuel can add millions of dollars to U.S. costs.
Critics in Congress are fuming. They say the United States is getting suckered as the cost of the war exceeds a half-trillion dollars – $10.3 billion a month, according to the Congressional Research Service.
Some lawmakers say oil-rich allies in the Middle East should be doing more to subsidize fuel costs because of the stake they have in a secure Iraq. Others point to Iraq's own burgeoning surplus as crude oil prices top $100 a barrel. Baghdad subsidies let Iraqis pay $1.36 a gallon.
The U.S. military, through its Defense Energy Support Center, buys fuel on the open market, paying from $1.99 a gallon to as much as $5.30 a gallon under contracts with private and government-owned oil companies.
The center then sets a fixed rate for troops, currently $3.51 a gallon for diesel; $3.15 for gasoline; $3.04 for jet fuel; and $13.61 for avgas, a high-octane fuel used mostly in unmanned aerial vehicles.
Kuwait does grant substantial subsidies, but they cover only about half the fuel used by the United States in Iraq. The discount is eaten up by the Defense Energy Support Center's administrative costs and market fluctuations.
Overall, the military consumes about 1.2 million barrels, or more than 50 million gallons of fuel, each month in Iraq at an average $127.68 a barrel. That works out to about $153 million a month.
Historically, these figures are astounding. In World War II, the average fuel consumption per soldier or Marine was about 1.67 gallons per day; in Iraq, it is 27.3 gallons, according to briefing slides prepared by a Pentagon task force established to review consumption.
The surge in demand can be attributed in part to the military's expanding aviation fleet, including helicopters, and its reliance on planes to shuttle cargo and troops between the United States and Iraq. Vehicles, too, are more heavily armored and require more energy to run. Another major contributor is the widespread use of generators to cool troops.
Still, some lawmakers say the United States is paying too much to secure an oil-rich nation that resides in a region swimming in the natural resource.
Rep. Gene Taylor, D-Miss., a member of the House Armed Services Committee, said he was shocked last December to watch U.S. troops in Kuwait filling diesel tanks at higher prices than he would have paid to fill up his boat in Mississippi.
“The Kuwaitis have been good allies. But let's face it, that nation would not be there if not for the American liberation of Kuwait,” Taylor said, referring to the 1991 war.
When Taylor pressed Pentagon and Embassy officials on the matter, he was told Kuwait was offering a discount.
Unlike other oil-rich allies, Kuwait is estimated to have saved the U.S. government $1.2 billion in four years, from 2002 to 2006, U.S. Embassy officials told Taylor in a Jan.3 letter.
Under the current agreement, the Kuwait-owned company supplies 7,000 gallons per day of free fuel to U.S. forces operating inside Kuwait. For troops in Iraq, Kuwait offers 860,000 gallons of jet fuel a day at less than half the market price. This discounted fuel represents more than half the fuel the United States uses in Iraq each day.
The rest of the fuel – about 100,000 to 200,000 gallons a day – is sold to the U.S. military at market rate.
When Taylor asked whether more could be done by Kuwait and other oil-rich allies in the Middle East, a senior Pentagon official said the United States wants to see an even bigger reduction in prices from Kuwait but indicated there was no guarantee that would happen.
“It is our view that all of those forces, whether they are semi-stationed in Kuwait ... or those transitioning into Iraq, should receive that fuel at a reduced rate, and that is continuing dialogue that goes on between our government and the government of Kuwait,” Mark Kimmitt, deputy assistant secretary of defense for the Middle East, said in a January hearing.
It is unlikely that the United States has pressed Saudi Arabia, Qatar or other oil-rich allies recently to help subsidize the cost of fuel in Iraq. The Defense Department referred questions about such negotiations to the State Department, where a spokesman said the agency was not aware of any.
Rep. Roscoe Bartlett, R-Md., also a member of the Armed Services Committee and a vocal advocate pushing the military to pursue alternative energy solutions, said he doubts such talks would be fruitful anyway, because of the impression by many in the Middle East that the United States invaded Iraq for its oil.
“I'm not sure they're as convinced we're fighting for them, as they were in the first Gulf war,” Bartlett said.
He hopes instead that the war will spur military development of hybrid technologies and alternative fuels at a time when private companies are lacking the financial incentive.
So far, the price of oil hasn't restricted combat operations, but it has inspired the military to hunt for new ways to conserve energy.
Development of more energy-efficient equipment will take time. Former CIA Director James Woolsey, who was co-chairman of a policy panel on the Pentagon energy study, said operations in Iraq and elsewhere are forcing the military to take the burden of fuel costs more seriously.
“The combination of $100-a-barrel oil and the terrorist situation and the dependence on the Middle East are really ... waking them up very fast,” Woolsey said.
In the meantime, other lawmakers say they want to see the high costs of the war defrayed by Iraq's dipping into its own oil revenues, which are projected to be substantial. Independent auditors estimate that Iraq is headed this year toward a massive surplus because of as much as $60 billion in oil revenues – a consequence of increased production paired with the sharp rise in prices.
“It's totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues,” said Sen. Carl Levin, D-Mich., chairman of the Armed Services Committee. “It doesn't compute, as far as I'm concerned.”
Administration and military officials say Baghdad hasn't been able to spend its oil revenues so far because the newly formed government is still learning how to manage its revenues.
They say Iraq's lack of spending isn't because of corruption or laziness, but rather Baghdad's inability to determine where its money is needed most and how best to allocate it.