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CNN Live Today

Oil Profits

Aired November 09, 2005 - 10:33   ET

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

DARYN KAGAN, CNN ANCHOR: So how much is too much? That's the big question oil company executives are facing on Capitol Hill. Senators, including Pete Domenici from New Mexico, are grilling them on their company's record profits. Hearings are going on right now as you look at live pictures from Capitol Hill. And the leaders of five of the biggest companies are on the hot seat. Experts say in the third quarter those companies reported more than $25 billion in profits. That, as many American motorists had to shell out more than $3 for a gallon of gas.
So with us now to talk about these hearings, and the oil profits and what you pay for gas and home heating oil, Brad Proctor, the founder and CEO of gaspricewatch.com. He's in Dayton, Ohio. And in Phoenix, Arizona, Craig Smith. He's the author of "Black Gold Stranglehold," which looks at some of the effects of U.S. oil consumption and how that pattern of consumption makes the country vulnerable to some big problems.

Gentlemen, good morning. Thanks for being here.

UNIDENTIFIED MALE: Good morning, Daryn.

UNIDENTIFIED MALE: Good morning.

KAGAN: Craig I'm going to start with you. One of the defenses or one of the explanations from these executives say look, we have a business, it's a very volatile business, and there are peaks and valleys. This happens to be a peak. What do you say to that?

CRAIG SMITH, AUTHOR, "BLACK GOLD STRANGLEHOLD": Well, to some extent, they're correct. And we're not opposed to people making money, Daryn. I think what's going to be at issue here, is will the oil companies do the socially responsible thing and take a lot of these profits and reinvest in infrastructure, refineries, domestic production where we can start to lower our dependence on foreign oil? If that's the net result of these hearings, then I'm very encouraged by the hearings.

I hope we don't see a lot of political grandstanding and end up with nothing, because we do have an opportunity to change the path of the energy policy that we, quite frankly, haven't had in this nation for a number of years.

KAGAN: Political grandstanding. Nothing happening? Are you talking about Capitol Hill? Come on.

SMITH: Well, Daryn, I've got to tell you, I think this is going to be a chance for the politicians to beat up on the oil guys, the oil guys to defend themselves. It will be much like Big Tobacco. But will anything really come out at the end of the day? We know windfall profit taxes just don't work. They didn't in 1979 and 1980. It actually decreased production and infrastructure in America and caused us to go to more imported foreign oil, which we know that's not the way to go. So why not encourage these companies, and maybe we need to do it with a little bit of a stick. I have no problem with that. But encourage these companies to do the socially responsible thing and start working on getting us independent from these foreign sources of oil that, quite frankly, we're going to be held at risk of the market if we continue to play in that arena.

Let's bring Brad in here. Brad, your Web site is for the people who are out there trying to fight the high gas prices. What if I could kick one of these senators off the panel and put you on there? What would you want to ask the oil company executives?

BRAD PROCTOR, CEO, GASPRICEWATCH.COM: You know, what I'd like to do right now is figure out why, for the first time in the five years that we've run our Web site, has the price since September 1st not gone up once? The slide has occurred all the way to today, when the congressional hearings are happening. We haven't seen any really major portion of the country go up, the national average continue to go down. A, that just looks a little bit odd to me, that we normally see, you know, an increase every week at any other given week out of the five years we've run the Web site.

So you know, what happened to cause, to trigger the idea that, you know, no need for any price hikes over the last 10 weeks. That would be the first thing, you know, because again, if they're all working independently, you would think some of them would have to have some price hikes in there.

But I agree with Craig, the idea is that they made the windfall profits, the idea is that they made those profits on the value of high-priced gasoline, high-priced oil, and you know, what are they going to do with these things?

And it's just not the private companies we should be looking at. We should lay a little blame at the government's feet, too. You know, why are there 50 different blends of gasoline that have to be made? Why is it so difficult to build a new refinery from the EPA standpoint? You know, some things the government must bend over and start to open up, so again we have more refineries, more modernized refineries, and it depends on what we see these oil companies do with these profits.

KAGAN: We put this out there to our viewers, and of course we have very smart viewers. We knew that, and it's only proved by the e- mail we're getting today. This question is from Roger, and he picks up on this refinery idea. He says, "When I hear discussions on the subject, on the news, it centers around the price of oil, yet one of the bigger problems if refinery capacity. Why are we not hearing more capacity and what can be done to use the Big Oil profits to build more refineries. Craig, you were talking about this not just today, but I know we had you on, I forget which hurricane, Rita, I think it was, Hurricane Rita was drawing down, you were concerned about the refineries and the few number of refineries that the U.S. seems to have.

SMITH: Yes, I really am, Daryn, and I think that that's a huge part. We've got to remember, the world's awash in crude oil. It's a question of taking that crude oil and turning it in to products that we use every day, whether it be gasoline, heating oil, jet fuels, diesel, so on and so forth.

And you know, I live in Phoenix in the wintertime, and of course we miss you here in Phoenix, Daryn.

KAGAN: Thank you.

SMITH: I always tell you that, because we do miss you. She was a wonderful anchor locally here.

KAGAN: Just a reporter. I wasn't blonde, so I couldn't anchor there.

SMITH: Yes, but you did a great job.

KAGAN: But I do know what happens there in Phoenix in the winter. You get that inversion layer. That's the smoggy time, and so they make you change the kind of gasoline that you use.

SMITH: That's right.

And Brad brings up a great point, that the blends are what really causes costs to go up at refineries. And I find it almost laughable, Daryn, I live in Southern California in the summertime, and over there we're still paying over $3 a gallon for gasoline. And everybody's bellyaching about it. But name me one California person that will welcome a refinery in California. The environmentalists have stopped every potential possibility for a refinery in California that would ease the crunch that we have for refined product in California.

So I think what we need to hear is the oil companies, and Congress and the environmentalists, all sit down and come up with a reasonable approach, which quite frankly, I outline in the book. This is a problem we can fix, Daryn, and we should do it right now.

KAGAN: Right now we're going to go to the next e-mail. It comes from New York City, from Greg Slagle. He says, "Another important issue that is rarely discussed is not a free market-type of competition. I think it's important not only to educate people how a gallon of gas is set and regulated, but also is this policy fair to the consumer, or does it just benefit the oil companies?"

On that note, explain to me, gentlemen, if I want to buy a bag of apples, I can shop around to different markets and get all different kind of prices. But gasoline, within a few pennies, no matter where you go, is pretty much the same price. Why does it work that way?

SMITH: Brad?

PROCTOR: I'd start off with that one. Because, you know, what we do see is, on many given days, in a single city, you could see a 15 and 25 cent difference in a gallon of gas. This is back when it was, you know, $1.25 for a gallon of gas, it was true when it was at $2.25, and it's true today. The idea is there are what they call zone pricings that the industry uses to be able to set a price, you know, that in many cases five to ten miles away, you could be paying 15 or 20 cents a gallon.

And, you know, it's hard to believe sometimes that, you know, we can get it all the way from Saudi Arabia, refine it, get it into our town and it costs another 20 cents to move it five more miles. So, a lot of this is part of the way the pricing occurs from the industry by setting the various zone prices. They look at the economic conditions and where you're willing to travel and they've got great data. And they pick a pattern and they price it that way.

SMITH: And you know, Daryn, what's interesting is normally when you see consolidation in a industry, when you have Exxon and Mobil come together, they reduce costs and pass that savings on to the customer. We've seen very little of the savings of traditional acquisitions and mergers be passed on to consumer.

And I think that's why most consumers are kind of angry right now. But I don't think they'd be angry if they heard these big oil companies say we're going to go after domestic production, we're going to increase refining capacity, we're never going to be caught again like we were during Hurricanes Rita and Katrina, and we are going to move towards reducing our dependence on foreign oil. I think you get a corporate amen across America on that, if we were to move in that direction.

KAGAN: Well, this is a topic that touches just about everybody who needs to fill up their car with gasoline. Craig and Brad, I'm going to invite you to stick around. We're going to watch the hearings and we're going to continue to answer our viewers questions. So we will see more of you in the next hour.

And this just in to CNN. We're getting word from our affiliate in Houston that Andrea Yates will receive a new trial. Of course, she is the Texas mother who touched off a controversy and the controversial debate about postpartum psychosis and postpartum depression, after -- in a 2000 she took her five children and drowned them in the family bathtub. She will be getting a new trial in the murders of her five children.

We're going to get a lot more of that information out of Houston in just a minute. Right now, a break. We're back after this. Actually, we'll move on.

What are Americans saying about these record oil profits? For some reaction, we turn now to CNN's Daniel Sieberg. He is at a gas station in New Orleans -- Daniel?

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT: Hey, Daryn, good morning. It's a rather steamy start to the day here in Metarie, which is in Jefferson Parish. Just to give you an idea of where we are, about a mile to my left is where the 17th Street levee broke. So we're going to talk to a couple of people here at a very busy Shell station this morning.

Irene (ph), you work in -- or you live in Slidell, which is about 20 minutes east of here. Did you fill up this morning?

UNIDENTIFIED FEMALE: Not all the way, no.

SIEBERG: Did it hit you pretty hard, though? I mean, how do you feel about the price of gas right now?

UNIDENTIFIED FEMALE: Well, I think it's a little crazy how high the prices are. But I mean, it's a little hard to afford to go anywhere.

SIEBERG: You've got quite a commute to make each day. So has it hit you pretty hard?

UNIDENTIFIED FEMALE: It's pretty bad. But, yes. I guess you could say so.

SIEBERG: All right, well, thanks for talking with us. We're going to just move down here a little bit to a gentleman named Harvey (ph). He actually lost his house in New Orleans East. Harvey, first of all, losing your house, obviously a huge impact. But has the high price of gas affected you a little bit, as well, after all this?

UNIDENTIFIED MALE: Yes, well, I think gas is too high and think we need a break (INAUDIBLE). Because I have to use about $120 of gas every week, going back and forth out of town to take care of business and stuff like that.

SIEBERG: You know, we've been hearing some proposals of giving money back to some consumers as part of these Senate hearings. Do you think that some money should come back to consumers and specifically, perhaps, to the victims of Katrina and Rita?

UNIDENTIFIED MALE: Yes, I think we all should get a break. We should get some kind of money back. I don't know whether we'll do it or not, you know. But like I'm saying, gas prices too high. They really are.

SIEBERG: Great. Well, Harvey, thanks so much for talking with us.

Daryn, that's just a sampling of some of the customers here at this Shell Station. Incidentally, I talked to the Department of Energy yesterday and about three quarters of those oil refineries here in the Gulf Coast area are back online. So, obviously, that's having a bit of an effect on the prices coming down. I think it's about $2.59 here, which is a little higher than the national average and still too high for a lot of people to pay.

Back to you. KAGAN: All right, Daniel Sieberg in Louisiana, thank you for that.

Want to get back to our breaking news story concerning Andrea Yates, the mother who has been doing prison time for the murder of her five children, who she drowned in the family bathtub back in 2000. We're getting word she will get a new trial.

I have on the phone with me right now her attorney, George Parnham. George, hello. What can you tell us about this news?

GEORGE PARNHAM, ANDREA YATES' ATTORNEY: Well, I heard, oh, about, I guess 30 minutes ago about the rejection by the court of criminal appeals for discretionary review. Since that time, my cell phone has been ringing off the wall, as you probably can hear.

It's a good day. It's a good day for a number of reasons. The whole issue of mental health and specifically women's mental health, and criminal justice system, I think has been championed with this decision. Andrea comes to this matter with -- with mixed emotions, to put it very politely.

I hurt for her in that she's going to have to go through a process, a jury trial, that will entail reliving through photographs, crime scene videos, autopsy reports, diapers, pajamas, the deaths of her children.

KAGAN: George, let me just jump in here a second. Because I am very interested with how she's doing and her mental state. But let me go back to the legal point here. She's getting a new trial based on what? What came through?

PARNHAM: The forensic psychiatrist who was the state's expert witness, Park Diets (ph) testified falsely during the guilt or innocence phase. That testimony was used by the prosecution in cross- examining one of our experts, as well as in arguing to a jury that she was calculated and cold in doing what she did. That testimony, of course, was false, and the case was reversed. And the court of appeals reversed it on those grounds, and the court of criminal appeals rejected the state's petition to reverse the reversal. That's it.

KAGAN: So, as you were saying, this will now go back to the beginning like starting over with a fresh, new trial. That means the evidence -- how is your client doing? What's her mental state and is she up for this trial?

PARNHAM: I missed that last? Is she up for trial, you say?

KAGAN: Is she -- her mental state?

PARNHAM: Yes, Andrea is much, much better. She has been receiving, I think, the best care that the penitentiary system has available to it. The quality of care doesn't meet the standards in the civil community. But, she obviously is very aware of the tragedy and lives with it every day of her life. KAGAN: Is this the type of situation where you would try to get her into a different facility while she awaits new trial?

PARNHAM: yes. We've already made those arrangements. I've been working on that, hoping that today would come for us. And I have spent a number of months getting the procedures in place to get her ready for a civil facility, albeit still a mental facility.

KAGAN: And who will ultimately make that call?

PARNHAM: Well, a number of entities. Sheriff's department, the Texas Department of Criminal Justice, the district court. The probate court that handles mental health matters in Harris County, as well as (INAUDIBLE) County, the county in which Andrea resides at Sky View. MHMRA. All of these entities, I've been working with on this very issue.

So, we have pretty much everything in place. And I just hope that when she -- when the mandate comes down from the first court of appeals, which should be in a couple of weeks, Andrea will be in another environment.

KAGAN: Do you have any contact with Rusty Yates?

PARNHAM: Yes, sure.

KAGAN: And has -- what's his comments or what's his reaction?

PARNHAM: I've not had an opportunity, quite frankly to talk to any family members...

KAGAN: Because this was all so late breaking.

PARNHAM: ... since this verdict.

KAGAN: Is it possible -- I guess anything's possible -- but is it possible that there wouldn't be a trial, that there could be some kind of negotiation between you and the state and the prosecutor to realize that this is a mental health question and not a criminal question?

PARNHAM: That has been my hope, that desire about this process that there comes to the table a realization that she is severely mentally ill, was on June the 20th. She needs medication, she needs care, and she exemplifies what's wrong with our system. And unfortunately, those efforts have been not successful, to say the least. She has been told that she will be retried.

KAGAN: And what was her reaction to that?

PARNHAM: Well, she obviously doesn't want to go through this process. She is very concerned about it. She would gladly forego this process, but you know, the right thing needs to be done here, and we're going to do it.

KAGAN: So she, in her state, would rather stay in prison as she is, getting the kind of care that she's getting, rather than go through a new trial and perhaps get better care?

PARNHAM: I -- she needs to be in a facility. She needs to be found not guilty by reason of insanity. She needs to be placed in a mental-health facility, and her mental-health issues need to be addressed for the rest of her life.

And she does not, as mentally ill as she was on June the 20th, 2001, losing her own hand, the lives of her children -- so deeply and desperately, she does not need to face the rest of her life behind bars. And I have always maintained that that was my goal for her, and we will accomplish that in the foreseeable future.

KAGAN: George Parnham the attorney for Andrea Yates commenting on the news that his client will be receiving a new trial.

Mr. Parnham, thank you for your time.

PARNHAM: You're welcome. Thank you.

KAGAN: And we have more breaking news for you, this one coming out of Virginia, Leesburg, Virginia, word of a small plane crash. This taking place in Loudoun County. The sheriff's department there saying a private plane crashed into a wooded area near Leesburg. They say that the plane went down shortly after taking off from the Leesburg Airport. We're told that two people were onboard that plane, and they are believed to have died in the crash, and believed to be the only two people onboard the plane. The plane did crash near a church, but nobody on the ground was injured.

More news on Andrea Yates, as well as that plane crash in Virginia. We have a lot of news happening on this Wednesday morning.

We also are continuing to monitor the hearing on Capitol Hill with oil company executives.

But we're going to shift our gears in the next segment and talk about Osama bin Laden. It's been awhile since we've heard from him. Where is he? Is he alive? That's ahead, when CNN LIVE TODAY returns.

(COMMERCIAL BREAK)

KAGAN: Once again breaking news out of Houston, Texas, word that convicted murder Andrea Yates will receive a new trial in the murders of her five children. She had been convicted of drowning her five children in the family bathtub. Those crimes happened back in 2001. Her lawyer, George Parnham, who we just talked with on the phone, had argued for the insanity defense for Yates. But she was found guilty on three capital murder charges for three of the deaths.

But a lower-court ruling had overturned the capital murder convictions of Andrea Yates based on a psychiatrists testimony in that trial. And now today the Texas Court of Criminal Appeals today refusing to reconsider a lower ruling that overturned those capital murder convictions of Andrea Yates.

So a new trial for Andrea Yates. As we were just talking to George Parnham, her lawyer, he says that is a mixed blessing for his client. He hopes that she will get now the psychiatric help that she truly needs at a different facility. But she is dreading going through another trial, facing the death of her children.

The other breaking news we're following out of Leesburg, Virginia. This is a plane crash. Two people onboard this plane. It crashed shortly after takeoff from the Leesburg Airport. We're getting reports that two people onboard the plane have died in the crash. The plane crashing near a church. No one on the ground, reports say, was injured.

And we're also watching what continues to happen out of Indiana, where the tornado touched down early Sunday morning, killing at least 18 people in Evansville, Indiana. Now we're starting to hear some of the first 911 tapes, 911 calls, that came in after that tornado touched down.

Let's listen in.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Help, help! There's a tornado! My house is (INAUDIBLE)! Please help! I'm (INAUDIBLE)!

OPERATOR: Sir, you're screaming. I can't understand your address.

UNIDENTIFIED MALE: My house just fell down!

OPERATOR: OK, what's your address?

UNIDENTIFIED MALE: 2620 Long Point.

OPERATOR: 2620 Long Point. What happened? What happened? What happened?

UNIDENTIFIED MALE: 2620 Long Point. Please help! Please!

OPERATOR: Is anybody hurt?

UNIDENTIFIED MALE: I don't know ma'am. I can't describe. I can't find my baby!

OPERATOR: You're screaming too loud, I can't understand a word you're saying.

UNIDENTIFIED MALE: My house is gone! Help! We need help! (INAUDIBLE)!

OPERATOR: OK, we're getting help on the way.

OK, help is on the way.

(END VIDEO CLIP)

KAGAN: And once again, those are some of the first 911 calls we're able to hear on tape, from Evansville, Indiana after that deadly tornado touched down early Sunday morning.

Ahead on CNN LIVE TODAY, record high prices for you, leading to record high profits for them. Oil executives in Washington this hour facing a Senate committee on the Hill. We'll have much more on the hearing and what it means for you.

The second hour of CNN LIVE TODAY begins right now.

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