On Sat, 13 Dec 2003 11:16:28 -0800, "ScottW"
wrote:


"dave weil" wrote in message
.. .
On Fri, 12 Dec 2003 10:31:02 -0800, "Michael McKelvy"
wrote:

Translation, the Dems have nothing so they dig for dirt.
The price they are charging for gas is hardly unreasonable given the
cost of
security. You lefty's do understand there are people shooting over
there,
right?

You obviously haven't been reading the coverage. Neither you nor
Sandman seem to realize that this wasn't an instance of Kellogg et.al.
gouging but *being* gouged by the Kuwaitis. They were charging almost
twice as much Turkish distributors. I don't see where there's a
substantial difference in securing oil from Kuwait versus Turkey. In
fact, one would think that delivering and securing Kuwaiti gas would
be cheaper than from Turkey. In fact, KBR claim that they make the
same amount of money (a "few" cents) from either source. So, the cost
of security of the shipments isn't the issue in this case. It's a
procurement issue. KBR claims that this supplier was the only one of
four Kuwaiti distributors that met the terms of the contract with DOD.
Yet, that doesn't explain why they couldn't continue to rely on $1.18
a gallon gas from Turkish sources, or require the distributors from
Kuwait to drop their prices from the $2.27 price and/or meet the Core
of Engineers standards of the contract.

It's sounding more and more like a sweetheart deal with the Kuwaitis.

Sounds like a "spot" market purchase with expedited delivery requirement.

And yet, this hasn't been stated at all. It's just bald speculation on
your part.

Call any supplier with unforecasted/new requirements and request
immediate delivery and see what you have to pay to get it.
You pointed out that of the 4 major gas distributors
in Kuwait only 1 could meet terms of the contract. This clearly
indicates contractual requirements above normal market.
The most obvious circumstance that comes to mind is short lead time.

That's one possibility. However, Halliburton hasn't used that "excuse"
in their defense. One would think that that it would be the first
thing that they would point out.

More likely are "logistical security arrangements", which also apply
to the Turkish distributors, whom they apparently got plenty of gas
from, despite having to truck oil further and probably further through
dangerous Iraq. Kuwait is just across the border from the secured port
in the south. All they'd have to do is get the trucks to the port of
Umm Kasir, right across the border, where it would then be distributed
in country. Seems like it would be far easier to truck gas 50 miles as
opposed to 200 to 500miles depending on the route that they'd have to
take (don't forget that Northern Iraq isn't exactly the most secure
part of the world right now).

What would your restaurant pay for steaks delivered tomorrow if your
current supplier suddenly couldn't deliver? You would pay whatever
it takes to prevent customer dissatisfaction and fill that short term
demand.

It depends. We might just take it off of the menu. It happens almost
every month with something or other. We would *never* pay twice as
much for steak just to keep it on the menu.

Recall a few months back when one of the big complaints about the post
war
administration of Iraq was a fuel shortage which was aggravating the
Iraqi's.
They were scrambling to get gas to the country ASAP.
Obviously that kind of demand can't be satisified at market prices.

And yet, they were able to get far more gas from Turkey at half the
price.

This is going to turn into another example of New York Times tabloid
jouralism
and nothing more.

Actually, your complaint should be with the Pentagon auditors who blew
the whistle on this. Apparently, they didn't see any time issues that
would have caused a problem in dleivery of gas. Of course, we *might*
eventually find out that it's the case, but we haven't heard that yet.