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Conditions Deteriorate in Wake of Katrina; U.S. to Tap Oil Reserves

Aired August 31, 2005 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MILES O'BRIEN, CNN ANCHOR: Live pictures, Slidell, Louisiana, and this is the muck which covers much of this town inside and out. Just a little sense of the cleanup that lies ahead here and the cleanup that will be hampered by the fact that there's no communication, no electricity, no water.
All of the infrastructure -- all of the things we take for granted don't exist here, as is the case all throughout much of this region. And to make matters even worse, in the city of New Orleans, about 30 miles south of where I stand, the other side of Lake Pontchartrain, on top of everything else they are dealing with, the floodwaters are persistently rising in the wake of those levee breaches.

In the path of Katrina, it's very difficult to get a handle on the scope of the destruction, but just taking a look at this one street and multiplying it by who knows how many thousands, may give you a sense of it.

SOLEDAD O'BRIEN, CNN ANCHOR: And I think that's a fair question. Who knows how many? Because, at this point at least, it doesn't feel like anybody has the grasp on the extent of the problem -- the names and the locations of the survivors, people they've been able to recover. Many questions, I think, remain for the elected officials who have a plan, but so far haven't been able to implement that plan.

Lots of things to talk about ahead this morning. Miles, thanks. We'll check in with you in just a little bit.

We'll have much more on the aftermath of Hurricane Katrina in just a few moments. First, though, a look at some of the other stories that are developing, especially one out of Iraq. Let's get right to Carol Costello.

Good morning.

CAROL COSTELLO, CNN ANCHOR: Good morning, Soledad. Good morning to all of you.

Now in the news, breaking news out of Iraq this morning. We've been telling you about this terrible tragedy in Baghdad: nearly 650 people killed in a stampede during a religious procession. But there's word now that the death toll could reach 1,000.

Some one million pilgrims were walking to a mosque for a Shiite ceremony, when someone shouted there was a suicide bomber. Some people were pushed and some apparently even jumped into the water to their deaths in the Tigris river. Most of the victims are said to be women and children.

The U.S. will tap oil reserves to boost supply in the wake of Katrina. Energy secretary Sam Bodman was making that announcement earlier this morning. The storm has disrupted oil supplies from tankers and offshore oil rigs. The hope is that the extra boost could stabilize prices.

(BEGIN VIDEO CLIP)

SAMUEL BODMAN, U.S. ENERGY SECRETARY: Well, the first job is to try to provide supply. One of the reasons you're seeing an increase in prices is that we have perceived shortages and that's something that we can try to deal with.

(END VIDEO CLIP)

COSTELLO: The amount of oil being released is not yet known, but we're expecting to find out more details later today and Andy will have more on this in just a minute.

President Bush heading back to Washington to oversee relief efforts for Katrina. The White House says the president decided to cut his working vacation short in the wake of the devastation. He's expected to visit storm-ravaged areas of the Gulf Coast later this week.

And as the president leaves Crawford, so does anti war activist Cindy Sheehan. She and supporters will pull up stakes today and kick off the Bring 'Em Home Now Tour. They'll crisscross the country in buses and then wrap things up in Washington with an anti war march on September 24.

Supporters of President Bush have planned events as well.

And the apparent remnants of Katrina being felt in central Virginia. These are pictures we just got in this morning: storms and a possible tornado, downed trees and cut power to some 4,000 customers. More than a dozen homes were damaged, but luckily there are no reports of any injuries.

Back to Miles now.

M. O'BRIEN: This is Miles O'Brien live in Slidell, Louisiana. The Federal Emergency Management Agency is responsible for a lot of the organization and response to an event like this. And something of this magnitude -- perhaps it is impossible to properly organize and prepare for.

A lot of things were staged in advance in an effort to get help to people as quickly as possible but, given the severity and the breadth of the destruction of Katrina, it has taxed that plan significantly.

High-ranking Federal Emergency Management Agency officials are in the region today. As a matter of fact, they've just arrived there at the main airport in New Orleans. Our Ed Lavandera is embedded with them as they do this tour today.

Ed, tell us where they're headed.

ED LAVANDERA, CNN CORRESPONDENT: Miles, what they are viewing here at the airport in New Orleans: they're setting up a field hospital and FEMA has prepared nearly 40 of these field hospitals. As part of the clean-up (ph) of the disaster, medical assistance teams. Nearly 40 of them are expanding out across the region.

And to give you a perspective of how vast of an operation this is, I was told by one official here that, of the four hurricanes that hit Florida last year, there were never more than five of these teams dispatched to any one of those hurricanes. For this one, they've got 40.

This is massive. They're essentially turning the terminal here at the New Orleans airport into a hospital. We rolled in with them overnight. Many of these people have come from Texas, Washington, California, to take part. They said they stayed in Texas and they spent most of yesterday making their way into New Orleans. In fact, We've been up with them al night long as they've rolled into here.

One of the main concerns -- they stayed in Baton Rouge on the LSU campus. And one of the main concerns, given all of the reports of rioting or looting and carjackings and that sort of thing, security a major concern, and one of the commanders gave a little pep talk to the folks before heading out last night. And it was raw and very real.

People down here right now are desperate. They're hungry, they're thirsty, they're tired, they're afraid.

LAVANDERA: Miles, behind me, you can see many of these folks are -- what they're doing now is unloading all of the equipment that is coming in. We were in a convoy that was about a mile long last night. So there's a lot of equipment, basically, that they set up in a few FedEx trucks -- pharmacies on wheels -- and they say that they will be open for business here shortly and that they do expect they'll have to treat a lot of patients here in the next few hours.

M. O'BRIEN: Ed, I suspect there will be a tremendous need for this. Do they have the kind of capacity required given all of the medical needs of New Orleans right now?

LAVANDERA: Well, they're hoping for -- perhaps not this one in particular -- but because they have 40 of these field hospitals they do feel that now the infrastructure is starting to arrive.

Basically, my understanding of what this particular team that I am with will be doing -- they're prepared to be here 24 hours and then more supplies will be arriving. So, basically, what we rolled in with here is good to get them through the next 24 hours. And it is an amazing sight to see the logistical challenge that goes forth in watching these folks put together these field hospitals. And you can sense that from all of them that they understand that it's going to be a long night. Some of them spent a couple of hours sleeping in their cars here in front of the terminal waiting to get started to work here this morning as soon as the sun came out.

M. O'BRIEN: Ed Lavandera, who is embedded with FEMA at the main airport in New Orleans. Those words kind of resonate -- of the FEMA official: desperate, tired, thirsty. I think we can add to that: hot. It is very hot and humid here. Without electricity, there's very little relief.

Those signs of tension and desperation are just about in every corner throughout this region. Let's move a little bit to the east, to Gulfport, Mississippi. In some respects, damage there is of a different sort. It's more akin to a bomb being dropped as opposed to the rising waters of New Orleans that have created a different sort of problem.

That's where we find CNN's Kathleen Koch. Kathleen?

KATHLEEN KOCH, CNN CORRESPONDENT: As anyone who's watching can see behind me, maybe it does look like a bomb was dropped, like a war zone. What you see are 18-wheelers that were washed onshore from what was the bustling port of Gulfport.

They're now -- just about half an hour ago-- trucks have come in and they're starting to begin to clean up the debris. We have back hoes, we have dump trucks, bulldozers that are beginning to clear things away.

We have some aerial shots of Gulfport. And pretty much from Biloxi all the way down the coast, all the way to its Western end, the first couple of blocks right on the beach have been simply erased. There is virtually nothing left.

We made our way into two communities west of here, not as large as Gulfport, which is the largest metropolitan area in the state of Mississippi. But these are Long Beach, Pass Christian. Some 24,000- plus people live there. Downtown Long Beach, again, the first couple of blocks right off the beach, there's nothing left but piles of rubble. You can't even tell what the buildings used to be. Pass Christiane, when you try to go down the streets to the beach, there are roofs, there are trees, totally impassable.

So many people did survive, amazingly. A lot of them rode it out, Miles. The Camille survival syndrome was responsible. They thought they were hurricane-proof after living through Camille in '69 in these homes. They said if we survived Camille, we can survive anything. A lot of them were wrong -- Miles.

M. O'BRIEN: Kathleen Koch. Boy, those words are words that I heard time and again yesterday in Biloxi. People who had lived through Camille said we thought we could withstand it. And they also said that Katrina and Camille, there just simply is no comparison, Katrina being so much worse.

Back to you -- Soledad.

S. O'BRIEN: Miles, thanks. We got some new developments to tell you about, as well, with this disastrous levee breach in New Orleans. The Army Corps of Engineers is telling us that Army Chinook helicopters are now moving into place. They've got this plan, which is to drop 3,000 pound sandbags. They're going to try to help stop the rushing water from pouring out. You can see it right there, you can see the breach, you can see where it's pouring out.

Of course, this would be only a temporary fix. Earlier on AMERICAN MORNING, one of the people who's leading that effort to try to fix the levees explained just how difficult this process is.

(BEGIN VIDEO CLIP)

MICHAEL ZUMSTEIN, ARMY CORPS OF ENGINEERS: The fastest way to unwater the city is to intentionally breach the levees that we have created to protect us from the hurricane. Our intention is to go ahead and close off this breach and then, as the lake recedes, we will systematically, in key places, go ahead, peel back the levee, allow it to start draining off. This gains -- this is much more effective and much faster than pumps. But we still need the pumps in order to fully drain the city.

(END VIDEO CLIP)

S. O'BRIEN: CNN's Tom Foreman knows this city's levee system very well. He joins us from our D.C. Bureau. Good morning, Tom.

TOM FOREMAN, CNN CORRESPONDENT: Good morning, Soledad. All day long, people were asking me questions yesterday. They were saying, how can the storm be passed, how can all of the rain be stopped, and you still have this problem of water rising? Well, for many, many people, this has been a puzzle.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): The rain stopped falling, but the water kept rising. In New Orleans and its immediate suburbs, areas are now flooding that were largely clear at the storm's height.

JOHN ZARRELLA, CNN CORRESPONDENT: The water is also, if we can take a look now, creeping up the sides of the buildings here. Earlier today, none of this was standing here. So it is continuing to rise.

FOREMAN: To understand why at least two of the levees around the city have failed, think of New Orleans as a fortress protected against water on all sides by walls, levees, which are large, earthen dams.

Officials say the first failure, likely caused by water flowing over the levee and eroding it, happened on a boat canal at the east end of town. That's a low-lying area. So that flooding was contained.

The second levee failed in the same way. However, it was on a drainage canal in the north, near Lake Pontchartrain. This is critical. A side view of the city with the lake on the right, the Mississippi River on the left, shows almost the entire town is below lake level.

So unless the levee is plugged, water will flow until its level in much of the city is the same as the level of the lake. Only a small part of the French quarter, which is at a higher level, and other areas with natural protection might stay dry.

DONALD BASHAM, U.S. ARMY CORPS OF ENGINEERS: But right now, our first primary emphasis is try to get that closure so we can stop the water flow and so we can start getting the water out of the city.

FOREMAN (on camera): Do you have any idea how long that will take?

BASHAM: Don't have any idea.

FOREMAN: Days, weeks?

BASHAM: Don't have any idea.

FOREMAN (voice-over): For now, officials say, until the levees are fixed and the massive pumps that failed during the storm are restarted, the water is going nowhere.

(END VIDEOTAPE)

FOREMAN: This amount of damage here -- having lived there, I know what these pumps can do. These pumps are extraordinary when they're working right. It says something about the storm that some of them failed in the middle of it, how massive the amount of water was and how much trouble they were having with electricity and everything else. And the fact that the Army Corps is now saying and FEMA is now saying you can't just pump out the city, that's impressive if you're from New Orleans. Because, frankly, we always believed the pumps could do everything.

So we're talking about an extraordinary amount of water, and the difficulty they're having plugging these holes. They've been talking about this plan of dropping sandbags with helicopters for pretty much 24 hours now. And it speaks something to the difficulty of getting supplies where they belong, getting this into action.

As I said a couple of days ago, the keys right now are transportation and information. There's not nearly enough of either one. They're not being able to move supplies or people as much as they want to, and even the people in charge consistently are saying we don't know for sure what's happening everywhere because the phones are still down. The power is still down. These problems, Soledad, are getting bigger and bigger and this is going to be a very long-term problem.

S. O'BRIEN: An ominous sign, really, Tom, when the Army Corps of Engineers won't even commit to days, months or weeks when they can even get this problem under control. You mentioned you spent a lot of time in New Orleans. Are your friends OK? Have you talked to everybody there?

FOREMAN: Well, no, I haven't talked to everybody there because you can't reach everybody there. And many of people, some friends of ours who we have reached -- they fled to Mississippi. They don't know what they're going to do.

I'll tell you that something nobody's talked about yet, but this is a big issue. We have effectively had, overnight, a million people,, maybe more in this country, put out of work, put out of their homes to some degree. You're talking about a city where there's -- the banking is shut down now, the insurance companies are shut down, the accounting firms are shut down.

This is a major American city. We haven't had anything like this -- I can't recall, in modern history, a major American city being shut down in this way. I think we're going to see, in coming days, discussion at the highest federal levels of even things like public works programs. Because they're going to say what do we do with all these people who are now wandering the South and the Midwest with their families, their children, their grandparents, saying what do we do now? They have no jobs. They may not be able to access their banking at the moment. We don't about that. We don't know what's going to happen with insurance. They don't even know if they've lost their homes. This is going to be enormous.

And we're going to have to hear a lot of conversations about that in the coming days for all the people in New Orleans, all these people who I know and love so dearly and who we feel so bad for now.

S. O'BRIEN: Yes, we sure do. And it is, as you point out, a massive, massive, massive, massive problem. Tom Foreman. Thanks, Tom.

A short break. We're back in a moment.

(COMMERCIAL BREAK)

M. O'BRIEN: Welcome back. Live from Slidell, Louisiana, I'm Miles O'Brien. AMERICAN MORNING continues.

If you look at the street behind me -- just dozens of businesses down this one street. And it's probably safe to say that each and every one of those businesses ultimately is going to have an insurance claim to file.

And you can imagine. We've been trying to give people a sense of the the scope of this problem -- it's almost impossible to do it -- because this is just a little microcosm of what are thousands and thousands of streets throughout all this region. And there are so many other difficulties compounding the effort to try to get people back on their feet that it's very difficult to even begin to get at this problem.

One of the people, as part of this whole picture, who will be in the effort there to get people back on their feet is Sharon Green. She is a State Farm agent here in Slidell. And, Sharon, I know State Farm in Louisiana ensures one out of three houses. This is something that is unprecedented and it's going to be a tremendous financial challenge for your company on the big scale. For you personally, though, dealing with your clients, have you been able to communicate with them?

SHARON GREEN, STATE FARM AGENT IN LOUISIANA: At this time, we don't have any communication, but currently, I am communicating with my agency field executive Teresa Hollander and, from that standpoint, we do have the 1-800 number. It's 1-800-SF-claims. And our customers can contact that number.

M. O'BRIEN: Yes, but folks don't have a phone, Sharon. How do they get to people like you and to claims adjusters?

GREEN: At this time, we have the toll-free number. We also have our Web site.

M. O'BRIEN: OK, but there's no electricity; there's no phones. What can they do to get a claim?

GREEN: Well, we do have our claim representative. We have over 2500 claim representatives that are ready to be deployed as soon as we get the OK from our authorities as to being able to come into Slidell and to assist our customers.

M. O'BRIEN: So the process hasn't yet begun because there are many other concerns, I guess, right now, as to whether it's safe to even begin this process.

GREEN: Exactly, safety is first. And we have to make sure that the community is in a condition where the customers can come back. And right now, the authorities are requiring that the customers stay away at this time until they give us the okay.

M. O'BRIEN: So, at this point, since they're being told to stay away, you're probably not hearing from them as you might expect. Did you ever envision something like this? We've been talking about how people dreaded this and yet no one could possibly conceive of it, either.

GREEN: No. I would tell you, this is horrific. This is unbelievable. I did not expect to see what I see today. But, thank God, you know -- I'm just hoping that the lives are saved -- that we don't have any issues in St. Timony as far as any deaths.

M. O'BRIEN: Well, unfortunately, there are many people missing this morning and there are many that are feared dead.

Sharon Green, thank you very much for your time.

Back with more AMERICAN MORNING in a moment.

(COMMERCIAL BREAK)

S. O'BRIEN: Welcome back, everybody. The face of gambling in Biloxi, Mississippi, is about to change forever. Plus, how are investors reacting to news that the America's petroleum reserves will be tapped?

Andy Serwer is "Minding Your Business" this morning. Good morning.

ANDY SERWER, "FORTUNE" COLUMNIST: Good morning. A positive development there about the release of that strategic petroleum reserve and the investors reacting favorably. The price of oil has dropped a little bit and the stock market is up marginally.

Still huge problems in the Gulf, as far as business goes. We have a picture of an oil rig that has washed ashore in Alabama. Look at that. Just on the beach. And the amazing part, Soledad, no oil company has yet claimed it. We don't know -- seriously. No one knows whose rig that is.

S. O'BRIEN: We're laughing...

SERWER: Truly remarkable.

S. O'BRIEN: ... but that's not -- that's not even funny.

SERWER: It's terrible. It's unbelievable what's going on.

Let's move over to Mississippi, shall we, and talk about the gaming industry there. It's the third largest market after Las Vegas and Atlantic City, employing about 14,000 people, producing $330 million of revenue to the state of Mississippi. "The New York Times" says that's about 10 percent of the state's annual budget. Six casinos there basically wiped out or destroyed or heavily damaged.

And you know, the interesting thing here is these casinos are technically riverboat casinos, so they're built to float. That put them directly in harm's way here. And the word is that probably, when all is said and done, the rules are going to change here, and they're going to build casinos on land and change the rules in the state of Mississippi, which seems to have sense. If you're going to have gaming, you might as well put the casinos...

S. O'BRIEN: In an area where they're...

SERWER: ... where they're safe.

S. O'BRIEN: And when there are hurricanes. That's sort of a smart idea. Andy, thanks.

SERWER: That's right.

S. O'BRIEN: A short break. We're back in just a moment. Stay with us.

(COMMERCIAL BREAK)

S. O'BRIEN: That wraps it up for all of us here at AMERICAN MORNING. I'm Soledad O'Brien, and for Miles O'Brien. We'll see you back here tomorrow, as well. Let's hand it off to Daryn Kagan. She's at the CNN Center. She's going to take you through the next couple of hours on CNN LIVE TODAY.

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