Defense Department says it has $980 million in contracts with BP for current fiscal year; Oil giant was largest provider of fuel to Pentagon in the world in 2009

The organization charged with helping BP plug and clean up a leaking oil drill hole in the Gulf is also providing aid in another way: buying hundreds of millions of dollars of its oil.

Despite heated rhetoric from President Barack Obama -- and the forced creation of a $20 billion fund to pay claims related to the disaster -- the US military is still buying much of its oil from BP. The Pentagon is the largest user of oil in the world, more than any other single nation or corporation.

Veteran intelligence reporter R. Jeffrey Smith caught the story in Monday's Washington Post.

BP... remains a heavy supplier of military fuel under contracts worth at least $980 million in the current fiscal year, according to the Defense Logistics Agency. In fiscal 2009, BP was the Pentagon's largest single supplier of fuel, providing 11.7 percent of the total purchased, and in 2010, its contracts amount to roughly the same percentage, according to DLA spokeswoman Mimi Schirmacher.

"BP is an active participant in multiple ongoing Defense Logistics Agency acquisition programs," Schirmacher said, without providing details. BP spokesman Robert Wine said he was aware of at least one "big contract" signed by the U.S. military after the oil rig explosion on April 20, involving the supply of multiple fuels for its operations in Europe.

So far, members of Congress have discussed barring BP from any new oil and gas drilling leases, not from fuel sales to the government. Rep. George Miller (D-Calif.), who co-chairs the House Democratic Steering and Policy Committee, said last week that he would introduce legislation to shut BP out of such leases for the next seven years, as punishment for what he described as "serial" legal violations. But Rep. Bart Stupak (D-Mich.), chairman of the House Energy and Commerce Committee's subcommittee on oversight and investigations, said in a statement that "the U.S. government needs to look at all possible options when it comes to showing BP, or any corporate bad actor, that a continued culture of cost cutting and increased risk taking will absolutely not be tolerated."

Meanwhile, BP's costs arising from the devastating oil spill in the Gulf of Mexico have rocketed to $3.12 billion, the company revealed on Monday.

"The cost of the response to date amounts to approximately $3.12 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs," it said in a statement.

The group added: "It is too early to quantify other potential costs and liabilities associated with the incident."

The latest estimate of costs, equivalent to 2.06 billion pounds, is far higher than the 2.65 billion dollars that was given one week ago.

The company's share price has collapsed by more than 50 percent since the Deepwater Horizon oil rig which the company operated sank on April 22, two days after a blast killed 11 workers.

AFP via Raw Story