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AP Military feels fuel-cost gouge in Iraq By ANNE FLAHERTY, Associated Press Writer 8 minutes ago WASHINGTON - Think you're being gouged by Big Oil? US 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.
A penny or two increase in the price of fuel can add millions of dollars to US costs. 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. Kuwait does grant substantial subsidies, but they cover only about half the fuel used by the US in Iraq. And the discount is eaten up by the Energy Support Center's administrative costs and fluctuations in the market. In World War II, the average fuel consumption per soldier or Marine was about 167 gallons a day; 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 US 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. The Pentagon's demand for fuel in Iraq has had little if any effect on global oil prices. Frank Verrastro, director of the energy and national security program at the Center for Strategic and International Studies in Washington, said the military's use of 12 million barrels a month -- or roughly 40,000 barrels a day -- represents a small chunk of the 86 million barrels demanded each day on the global market. Instead, Verrastro says, the hike in oil prices since the 2003 invasion is more likely due to a "fear factor." "Prices rise when Iran saber-rattles, or there's a disruption potential in Nigeria," he said. An even larger driver of fuel costs is global demand, fed by robust economies in Asia and the lack of available alternative fuel sources, according to Verrastro. Still, some lawmakers say the US is paying too much to secure an oil-rich nation that resides in a neighborhood swimming in the natural resource. But let's face it, that nation would not be there if not for the American liberation of Kuwait," he said, referring to the 1991 conflict. When Taylor pressed Pentagon and embassy officials on the matter, he was told Kuwait was actually offering a rare discount. Under the current agreement, the Kuwait-owned company supplies 7,000 gallons per day of free fuel to US 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 US uses in Iraq each day. The rest of the fuel -- about 100,000 to 200,000 gallons a day -- is sold to the US 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 US 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's unlikely the US 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. 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 US invaded Iraq for its oil to begin with. "I'm not sure they're as convinced we're fighting for them, as they were in the first Gulf war," Bartlett said. He 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 co-chaired 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, I think, waking them up very fast," he said. In the meantime, other lawmakers say they want to see the high costs of the war defrayed by Iraq 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. 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 due to corruption or laziness, but rather Baghdad's inability to determine where its money is needed most and how to allocate it efficiently. The Iraqis have a "genuine mechanical problem in drawing up national budgets (and) executing those budgets, particularly when it comes to capital infrastructure," said David Satterfield, the State Department's senior adviser on Iraq. But, he added, the government is improving with time and should be able to do more in the months to come.
A convoy of armored US Army vehicles drive toward Madain, Iraq in this April 18, 2005 file photo. US troops in Iraq are paying the same prices as Americans back home, despite consuming the fuel at staggering rates in a war to stabilize a country known for its oil reserves. Every penny increase in the fuel prices can mean millions of dollars added to the Pentagon's bottom line, increasing the burden on American taxpayers.
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