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American Morning
Gas and Oil Hit Record Highs; American Airlines Will Impose New Fees for Checked Bags; Brits Invade Moscow in Football Showdown; Is There Sexism on Campaign Trail?
Aired May 22, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: For the 15th straight day in a row, gas prices hit a record now $3.83 a gallon. According to AAA, the price of oil hit $135 a barrel overnight, up $5 in just over 24 hours. But today there's a difference.
The high cost of oil is beginning to hit us in ways that we couldn't have imagined. American Airlines, for example, announced that it's going to start charging passengers to check even one bag, and it's laying off workers as well.
Today big questions over where the high price of oil has the economy headed. We've got it covered for you.
Our Alina Cho is at New York's LaGuardia Airport for us this morning, and Ali Velshi here in the studio watching issue number one for us. Good morning, sir.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, if you can call it that. As you said, a new record for the price of gasoline. This price of oil is ridiculous, $135.09. When we started talking about oil yesterday morning it was still pretty high. It was over $130, but that kind of surge is something that is very worrisome.
Now, there are a couple of reasons why this is happening and the interesting thing is we have over the past few months or weeks, spoken a lot about speculation in the oil industry. Well, this is actually been driven by real demand and supply concerns.
Every week the United States government issues a report about how much oil we have in the United States, how much was imported, how much was produced, and how much was used. Yesterday's report indicated less oil than was expected. Now, that's kind of worrisome.
The other thing is the International Energy Agency is expected in the next few hours to downgrade its supply report about the world. It's expected to say that there's less oil in the world than we actually thought there was.
Now, I'll just tell you where we are right now. We are looking at a gain that has averaged more than $1 a day for the last month or so. We're definitely looking at more than a penny a day for gasoline. And the worrisome thing there is that if you just think about that pattern, just think about the fact that gas is $3.83 and we have 365 days in a year.
ROBERTS: Don't say it.
VELSHI: Right. Well, I'm not going to say it because we don't need that to happen. But as you said when you introduced us, this is not just about whether you drive an SUV or a Toyota Prius. This is everything you buy, everything you eat, everything you touch, everything that gets on a truck, everything that grows on a farm. So this is a very big problem and it's hitting us all over.
ROBERTS: Read a very worrisome article last night in "National Geographic" about the idea that oil production may be about to peak, level off, and decline.
VELSHI: Yes. We are hearing a lot about that conversation, and that's part of this. There have been a number of people predicting higher oil. But one of the things we should talk about another time is that, you know, you have to use water to get oil out of the pressure.
In Saudi Arabia, they're find (ph) -- they're using more water to have to get the same amount of oil out, which leads people to think if Saudi Arabia has got less oil than they're saying, now we may have a problem.
ROBERTS: Could be really worse.
VELSHI: Yes.
ROBERTS: Ali, thanks. We'll get back to you on that.
We're also going to check in with Alina Cho at LaGuardia Airport about American Airlines new proposal to charge for checked luggage and other ways that the airlines are getting passengers to help offset sky-high fuel prices. She's coming up in just a few minutes, but right now let's toss it over to Kyra who's at the wall.
KYRA PHILLIPS, CNN ANCHOR: Now is the "Most Politics in the Morning."
Senator John McCain spending the Memorial Day weekend at home in Arizona, and he's invited three possible running mates we're told. Former Massachusetts Governor Mitt Romney, a one-time rival for the GOP nomination, Louisiana Governor Bobby Jindal. He's a 36-year-old and the nation's first Indian American governor, and Florida Governor Charlie Crist.
Now, former Arkansas Governor Mike Huckabee was invited but says he can't make it. He's on a previously planned vacation. Minnesota Governor Tim Pawlenty has also been mentioned as a possible McCain running mate. We're going to ask him about that when he joins us live coming up at 7:50 Eastern time.
Now, Senator McCain taped an appearance on "The Ellen DeGeneres Show" that will air today. And things got pretty tense when the topic of same-sex marriage came up. We have a special access to that tape. Now we want bring it to you before you'll see it anywhere else.
(BEGIN VIDEO CLIP, "THE ELLEN DEGENERES SHOW")
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I think that people should be able to enter into legal agreements, and I think that that is something that we should encourage. I just believe in the unique status of marriage between man and woman.
ELLEN DEGENERES, HOST, "THE ELLEN DEGENERES SHOW": There is this old way of thinking that we are not all the same. We are all the same people, all of us. You're no different than I am. Our love is the same.
MCCAIN: We just have a disagreement, and I along with many, many others wish you every happiness.
DEGENERES: Thank you. So you'll walk me down the aisle? Is that what you're saying?
(END VIDEOTAPE)
PHILLIPS: DeGeneres announced her plans to marry her partner Portia de Rossi last week after the California Supreme Court cleared the way for same-sex marriage in that state. We'll see if John McCain walks them down the aisle.
Now, Florida is on the mind of both Democratic candidates today. Senator Barack Obama heads back there for fund-raising, continuing fresh attacks against presumptive Republican nominee John McCain's foreign policy and ties to lobbyists.
Senator Hillary Clinton will stay in Washington, but she's keeping the focus on getting Florida's delegates seated comparing her fight to earlier civil rights crusades. Both candidates agree that Florida needs a voice at the National Convention, though.
(BEGIN VIDEO CLIP)
SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Every American should be committed to voting, and that's why it's so important that we count those who already have. We cannot have a nominee who only represents 48 out of 50 states.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: My hope is in a couple weeks' time that we've won some more elections, we've won some more delegates, we've got the Florida delegation seated so that they're going to be at the convention. And then, we're going to have a convention in August, and I'm going to accept that nomination.
(END VIDEOTAPE)
PHILLIPS: The Democratic National Committee will decide what to do with Florida's and Michigan's delegates on May 31st.
ROBERTS: New this morning, a new assessment of al-Qaeda's strength in Iraq. The acting commander of U.S. forces in the Middle East told the "Associated Press" that al-Qaeda appears to be in its weakest state since the U.S. invasion. Thanks to a stepped-up campaign by Iraqi and U.S. forces, but he warns al-Qaeda can and does regenerate.
United Nations Secretary-General Ban Ki-moon is in Myanmar this morning with a message of hope for victims of the devastating cyclone there. The U.N. says the cyclone killed more than 130,000 people in Myanmar and that two million people are now homeless. Ban Ki-moon is expected to persuade the military government to accept more international aid.
And Massachusetts Senator Ted Kennedy spent part of his first day out of the hospital sailing and contemplating treatment for his brain cancer. He's hoping to take part in an annual sailboat race off of Cape Cod this weekend.
Kennedy waved to well wishers as he left the hospital in Boston. He had a bandage on the back of his head where doctors performed that biopsy. They're waiting for more tests to determine how they'll treat his brain tumor.
PHILLIPS: Whether you're planning to sail or fly, the best advice now is pack lightly but bring more cash. See how the airlines are making up their costs right there in your checked baggage.
And gender politics. Look at how far we are now from putting a woman in the White House. That's straight ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
ROBERTS: Just turning nine minutes after the hour. High oil prices are going to cost you even more when you fly.
American Airlines says it is going to start charging passengers $15 to check their first, not their third, their first bag. Our Alina Cho is live at New York's LaGuardia Airport, and we have seen surcharges, as I was saying, for like third and fourth bags. This is really incredible that they're going to charge you for one bag.
ALINA CHO, CNN CORRESPONDENT: That's absolutely right, John. In fact, even some people are used to $25 for the second bag. Delta and some other airlines do that, but, yes, this is really a dramatic move. But there's a reason for it and you said it at the top, high oil prices.
You know, American says it's going to cost $3 billion more to fly this year all because of soaring jet fuel prices. And so, they're going to do what most Americans simply aren't used to. They are going to start charging starting June 15th to check your first bag.
Here is how it breaks down. $15 to check your first bag, $25 to check the second bag, and this is where it gets interesting -- $100 to check your third bag.
So, for example, a family of four going to Disney World, that's going to cost you $240 each way. American is also taking some other drastic measures. They're going to cut flights by 11 to 12 percent. They're also going to lay off some workers. They haven't said exactly how much, but, you know, this is simply something that the flying public is not used to. We're used to paying $8 for a sandwich, maybe $3 for trail mix, but how about this?
This is what I have learned from reading the research this morning. You want a premium coach seat say on JetBlue, that's going to cost you an extra $10 to $20, and that's for four inches of extra leg space.
You want to carry a small child on your lap during a flight. That's going to cost you anywhere from $10 to 10 percent of the adult fare. That can be a lot.
And, finally, if you want to bring Spot or Fluffy (ph) on board in the cabin, meaning you want to bring a pet on board, that will cost you anywhere from $50 to $85. Now, as for that $15 charge for the first bag, amazingly here at LaGuardia the reviews have been mixed.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I would rather be charged more for the flight than the bag. It's understandable that gas prices are going up. But, I mean, right now and after that.
UNIDENTIFIED MALE: It's their terms. American Airlines is losing money. We got to make it somehow.
UNIDENTIFIED MALE REPORTER: So you think it's a fair charge?
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED MALE REPORTER: Really?
UNIDENTIFIED MALE: Pay for pound. They should charge me extra for being fat.
(END VIDEO CLIP)
CHO: In effect, that's what passengers are doing is paying by the pound. And one analyst we talked to said people want bare bones fares. They don't want to subsidize other people carrying around their wardrobe.
Well, the airline simply can't afford the cost and they just have to pass it on. Now, you can call it what you want. They call it a fee, but it's essentially a fare increase if you think about it.
Now, the airlines just this year have tried to raise fares 15 times. Eleven of those attempts have succeeded and that means for domestic airfare round trip, it's going to cost you about $100 more this year than last year. But, John, one thing we do know that you don't have to pay for, at least not yet, is to go to the bathroom on the plane.
ROBERTS: Yes. Well, that might not be too far away. I mean, you can call that bag fee anything you want, but shocking is probably what a lot of people would call it.
CHO: That's right.
ROBERTS: And I expect, too, Alina, that will cause more people to bring carry-on luggage. The planes will get even more jammed up. I don't know. I have to look further into this.
CHO: Oh, yes. It's going to be chaos. It's going to be chaos. And one thing we should mention, John, very quickly is that you United is also looking into this. You know, when one airline does something, the other airlines tend to follow suit.
(CROSSTALK)
ROBERTS: Absolutely. Slippery slope. Alina Cho for us this morning at LaGuardia. Alina, thanks. We'll talk to you again soon.
A look now at how airlines have pinched pennies before in your AM extra, and much of this, too, at the expense of passengers. Back in 1987, American Airlines saved $40,000 a year by eliminating one olive from each salad served in first class. 40 grand for an olive. Unbelievable.
Southwest says by taking out just three peanuts in each bag, it saves $300,000 a year. And Northwest says it saved $2 million a year when it dumped its half ounce bag of pretzels, and only 18 pretzels in those bags.
A peanut here or there, a pretzel there, saves a lot of money -- Kyra.
PHILLIPS: Breaking news on oil prices now. See for yourself how militants half away around the world are hitting you in your wallet. It's a story you'll see only here on CNN.
Plus, Rob Marciano is watching extreme weather for us. Good morning, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Good morning, Kyra. We have a severe threat today across the plains. Tornadoes look like they're going to drop later on today. Plus, fires continue to burn in the state of Florida.
Complete weather forecast coming up when AMERICAN MORNING comes right back.
(COMMERCIAL BREAK)
MARCIANO: You're looking at pictures from the brushfires burning over central Florida. Helicopters and firefighters hard at work with over 1,000 acres burning in Lake County just north of Orlando there. There were 140 homes just north of Orlando that were threatened. Residents were told to evacuate, but so far so good as far as structures going down. WKMG, thanks for that report.
All right. I'm Rob Marciano here in the CNN Severe Weather Center, and that's exactly what we're looking at is severe weather later on today across the plains.
A little bit of relief for Florida after record-breaking heat in places like Miami. They saw temperatures well into the mid-90s yesterday. That doesn't help when you're talking about firefighting. A little bit of rain on the radar this morning, so that may help the situation there as it comes in off the Gulf of Mexico, but we don't look for a whole lot.
Showers and thunderstorms firing already across parts of the plains. Kansas City, you're about to get some thunderstorms rolling your way, probably some gusty winds, maybe a little bit of small hail with this. So far, nothing too severe.
Up to the mountains of Montana and Wyoming and Idaho, you're looking at rain and, well, some snow at the higher elevations. How much snow? We've already seen five to six inches of snow. Could see another six to 12 inches of snow before the day is done.
This is all part of a system that -- well, very, very, very slowly making its way across the plains. As a matter of fact, it's going to be here for a couple days and that will keep the threat for severe weather in the forecast for a good couple of days.
Tornadoes, damaging wind, and large hail expected, especially across parts of western Nebraska. The Storms Prediction Center putting out a moderate risk for seeing tornadoes later on this afternoon, and that's serious business. We'll look for it right around, well, the end of the day today. Kyra, back up to you.
PHILLIPS: All right, Rob, thanks so much.
Well, straight ahead, soccer mania in London this morning and, of course, Becky Anderson is there. Becky, just give us an idea of how crazy it gets.
BECKY ANDERSON, CNN CORRESPONDENT: It gets extremely crazy when it's the biggest night of European Cup Football. It was billed as the biggest invasion since Napoleon. We'll tell you what happened in Moscow coming up.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ANNOUNCER: United again!
(END VIDEO CLIP)
ROBERTS: The British Invasion in Moscow is all the buzz in London today, and CNN's Becky Anderson is there for us. I guess, Becky, people this morning are saying Man, oh, Man U.
ANDERSON: Man, oh, Man U. Glory, glory Man U. Words the Red Devils reign supreme all-out with Chelsea, with red square turned royal blue. That was the big question last night.
It was Man United, what we called Chelsea team playing each other last night owned by Roman Abramovich, of course, and he is Russian.
The game was the biggest night of European Cup Football and it was in Moscow. And last night, some 40,000 English fans pitched up to Moscow in the rain to see their two teams.
It was a dramatic night of football, 1-1 in full time. Went to penalty shooter, and you couldn't make it up. The atmosphere was absolutely ridiculous.
Now, let me show you a couple of the front pages of the tabloid newspapers here in the UK. "Van the man." This is the goalkeeper for Manchester United. He was a big hero of the game last night.
This is Manchester United by winning this competition, the premiere team in Europe. Let me just show you the back page here. Playing on the Russian team, as it were. Van Der Tsar, Edwin's United penalty hero.
A fantastic night of football. The pubs in the UK you couldn't make it up, John. Absolutely packed. Consider that one team is from west London, one team from Manchester, but at the end of the day if you are a football fan in the UK, you have to play in your hand, you are standing in front of that television and the noise was unbelievable.
Almost silence in London for about 20 minutes during the penalty shootout but at the end of the day, I think probably the best team had won.
ROBERTS: All right. And then, what do they make, $150 million on that game as well?
ANDERSON: Yes, it was an enormous game. $150 million for Man United. I mean, this is an enormously important amount of money for a huge franchise. And it's an important game for another reason.
I'm going to show you the front page of this paper. "50 years after Munich tragedy, United triumphs in Moscow thriller."
And 50 years ago, almost to the day, John, a team called the Busby Babes, they were a Manchester United team. They took off from Munich after a European Cup game and that plane went down and a number of them were killed. So it was an enormous night for Manchester United in and of itself, and they won. So at the end of the day, victory I guess for the right team -- John.
ROBERTS: Good times for every soccer fan in the UK as well. Becky, thanks very much. Good to see you this morning -- Kyra.
PHILLIPS: For the 15th straight day in a row, gas prices hitting a record high. It's now $3.83 a gallon. That's according to AAA. This is happening as the price of oil spiked overnight hitting $135 a barrel.
So this morning this is what we're asking. Who or what is to blame for sky-high oil prices? Is it the oil companies, OPEC, the government for not stepping in, or consumer demand?
Cast your vote at CNN.com/am. Also, you can e-mail us. Tell us why you think prices are so high and what you would do about it, and if you've got an idea on how to help. Again, that's CNN.com/am. Just click e-mail us and we'll read those e-mails.
ROBERTS: Women backing Hillary Clinton say sexism has had a bigger impact on this campaign than racism. Coming up, a look at the side of the campaign that hasn't been heard until now.
And as we just told you, breaking news this morning with oil at record highs, near $135 a barrel. Violence in Nigeria is one of the reasons.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Recent militant attacks on oil pipelines here in Nigeria are one reason driving up gas prices worldwide.
(END VIDEO CLIP)
ROBERTS: We will have an exclusive report from Nigeria straight ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
PHILLIPS: Well, the dream of a woman in the White House is slipping away for Hillary Clinton and her supporters. So how will this play out on through the trail, the campaign trail throughout November. Sexism, racism, what's the biggest issue?
Joining me now, CNN contributor and Republican strategist Leslie Sanchez and Democratic Congresswoman Carolyn Maloney. Carolyn just came out with a new book, "Rumors of our Progress have been Greatly Exaggerated." It's a great read. Welcome to both of you.
Let's start right out with Senator Hillary Clinton, and she made these remarks about gender politics to "The Washington Post." Let's take a listen. I want to get you both to react.
(BEGIN VIDEO CLIP)
SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: The idea that we would have a presidential campaign in which so much of what has occurred that has been very sexist would be just shrugged off I think is a very unfortunate commentary about the lack of seriousness that should be applied to any kind of discrimination or prejudice.
(END VIDEO CLIP)
PHILLIPS: Congresswoman Maloney, you're a Clinton supporter. Your new book is all about this issue. What do you think? Sexism, has it played a big role in this campaign?
REP. CAROLYN MALONEY (D), NEW YORK: Well, I think that it's part of our society, as I point out in my book, but I would say as a whole the country is ready for a female president, as evidenced by the large number of votes that Hillary has gotten. She has gotten more votes than any of her male colleagues save one.
But I think it would be dangerous for American women to think because they have a female candidate for president or female president that we've achieved equality because, as I say in my book, we've come a long way, but we still have a long way to go.
PHILLIPS: Leslie, do you agree?
LESLIE SANCHEZ, CNN CONTRIBUTOR: I do. I think there's a lot of waning societal prejudices when it comes to women in office. I think globally, and especially in the United States if you look at Gallup polls, there's tremendous support for acceptance of a woman president, even an African-American woman president.
I think the bigger issue is this something that becomes a political rallying cry to mobilize feminist women of a certain generation? Is it something I think that tactically can be used to say sexism is there, we need to fight on? And in some cases, I think it's used strategically.
PHILLIPS: Well, I had a chance to talk with President Clinton's former press secretary, Dee Dee Myers. This is what she had to say. Take a listen.
(BEGIN VIDEO CLIP)
DEE DEE MYERS, FORMER PRESS SECRETARY, CLINTON ADMINISTRATION: If you listen to the language that's been used, Hillary Clinton has been described as shrill, hectoring, lecturing, all the kinds of, you know, words that we sometimes associate with unpleasantly with women.
(END VIDEO CLIP)
PHILLIPS: Congresswoman, why are we hearing those types of descriptions about Hillary Clinton but we're not hearing those types of descriptions about Barack Obama?
MALONEY: Well, I would say that some conservative commentators have found her race -- they've called it castrating, but I don't think that the American people are so intimidated by a woman running for office, and many, many people are supporting her.
I would say that as a whole the country is ready, but still individually. There are individuals who are resisting this. I was campaigning with her in New Hampshire and people were holding up signs, iron my shirt. There were other individuals who started this Facebook that 25,000 people have signed on to, saying that Hillary should be making sandwiches instead of running for president. But I think that's a small minority in our country compared to the people that are ready for an African-American, a woman, and a senior.
It's very interesting, Kyra, that we have three protective classes running for president, and it's really unprecedented and unpredictable. KYRA PHILLIPS, CNN ANCHOR: Leslie, do you think that all this calls to get Hillary out of the race, is it because she's a woman or is it because she doesn't have the delegates?
LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I think there's probably numerous reasons, but one is they're ready to unify around one nominee and move ahead with the process. There's a lot of people who do not like Hillary Clinton as a candidate, and that's across the board. That's probably been one of the critical character flaws that this campaign has run into.
But that being aside, she's run an amazing campaign. Generated a tremendous amount of interest and support. Galvanized women and reached out to a new generation of young women.
PHILLIPS: Even Barack Obama mentioned that two days ago in his speech. He said she's paving the way for my daughters as they grow up.
SANCHEZ: You cannot discount what this campaign has done historically both Barack Obama and Hillary Clinton. I think -- and anybody trying to tap that down is making a critical error. Her voice really needs to be heard. Her voters want to be heard. And these women who engaged in this race want to be sure that it's not so much maybe seen as a sexist issue, you know -- but that women are treated fairly in the race, and that's what they're sensitive to.
PHILLIPS: Congresswoman, final thoughts here. If not Hillary Clinton, is it going to take like with Geraldine Ferraro another plus ten years to see a woman in the fight?
MALONEY: Well, it's been 20 years since Geraldine was on the ticket, and I think many women are impatient. I still have great faith in Hillary, that Hillary will make history.
PHILLIPS: All right. CNN contributor, Republican strategist Leslie Sanchez and also Democratic Congresswoman Carolyn Maloney there out with a new book. Thank you both for talking with us. Appreciate it.
SANCHEZ: Thank you.
JOHN ROBERTS, CNN ANCHOR: It's 32 minutes after the hour now. Breaking news for you this morning. Gas jumped to another record today. Our fuel gauge shows a gallon of regular now going for $3.83 nationally. That's up more than 30 cents in the last month. Up 60 cents from a year ago.
A barrel of oil costs nearly $135 right now. That's up $5 in just the past 24 hours. Analysts say violence in the oil fields of Nigeria, one of America's biggest suppliers, is one reason why oil is so expensive.
CNN's Christian Purefoy takes us inside Nigeria for an exclusive report that you will see only on CNN.
(BEGIN VIDEOTAPE)
CHRISTIAN PUREFOY, CNN CORRESPONDENT (voice-over): We filmed these militants two years ago. Singing about their suffering. And now some of that suffering is being felt as far away as the United States. Recent militant attacks on oil pipelines here in Nigeria are one reason driving up gas prices worldwide.
SEBASTIAN SPIO-GARBRAH, EURASIA GROUP: In an interesting sense that American who is in the middle and lower economic brackets is actually paying for that systemic failure of the Nigerian government over the last 30 years in doing something structurally, you know, positive about Niger Delta.
PUREFOY: Nigeria is America's fourth largest oil supplier and these heavily-armed men say they are fighting for a greater share of that oil well. The Nigerian government has proposed a peace summit to find a solution to the region's problems, but in the meantime while a barrel of oil from the Niger Delta costs more than $120, 70 percent of the people here live on less than $1 a day.
So far the militant attacks on oil facilities are small, but the fallout is substantial.
JIM LACAMP, RBC WEALTH MANAGEMENT: Anytime a pipeline is affected, anytime any production gets shut down, you see oil prices jump up $1 or $2 a barrel just because there is no slack in the system.
PUREFOY: The troubles don't stop at the gas pump. Militants also target American oil workers. Since militants released Texan Macon Hawkins two years ago, they have kidnapped hundreds more foreign workers. Often released only once a ransom is paid.
(On camera): Oil companies like Shell and Chevron have invested heavily in security for their staff and facilities. But with the militants threatening more attacks to come, it's unlikely they'll be able to protect the American consumer from the soaring price of oil. Christian Purefoy, CNN, Lagos, Nigeria.
(END VIDEOTAPE)
ROBERTS: We just heard from Jim Lacamp in that piece. Now he joins us from Dallas to talk about what else is driving up the price of oil. He's an energy commentator, also a senior vice president of RBC Wealth Management.
Jim, good morning. We're talking there about the violence in the Nigerian Delta being one factor driving up oil prices. What else has oil at $135 a barrel this morning?
JIM LACAMP, RBC WEALTH MANAGEMENT: Good morning, John. Yes, there's a lot of factors, both short term and long term. In the short term, yesterday, we had the inventory report here in the United States. And even though a lot of Americans have actually curbed their demand for oil with prices this high, people are driving less. They're driving better cars, taking the bus, demand seems to have slipped here in the U.S., but inventories were lower, and they were much lower than expected.
So what it suggests is even though we've curbed demand a little bit, supply is coming in at an even lower rate. And then you take the longer term factors, and it's not just Nigeria. We've had diminished output from Iraq, diminished output from Iran. Then you take the government takeovers of all these global oil supplies like you've seen in Russia and Venezuela and Mexico, and you're getting less production from these areas.
So the bottom line is the world is using more oil, and the world is producing less oil. And the international energy agency is about to put out a report that says seven years from now we're going to be -- have a shortfall of about 12 million barrels a day unless the globe really ramps up oil production. So we've got a lot of issues that are impacting the price of oil not just Nigeria.
ROBERTS: The oil company executives were brought before Congress on Tuesday, really under fire as being the bad guys in all of this. Let's listen to what Senator Dick Durbin said on Tuesday.
(BEGIN VIDEO CLIP)
SEN. DICK DURBIN (D), ILLINOIS: Is there anybody here that has any concerns about what you're doing to this country with the prices that you're charging and the profits you're taking?
UNIDENTIFIED MALE: You know, I am a regular person. I've got lots of friends that are regular people and we do not like the situation any better.
(END VIDEO CLIP)
ROBERTS: Jim, everybody is mad at the oil companies. Are they solely to blame for this?
LACAMP: John, the oil companies control about 25 percent of the world's global oil supply and governments control 75 percent. Also, if you look at oil company's profit margins they range from 4 cents to 10 cents on the dollar. That's not out of line with anywhere else in corporate America. Just to give you an example, Apple makes about 13 cents on a dollar. Then you add in the U.S. energy policy which is really fuzzy. It doesn't really make any sense.
To give you an example, we allow China, Russia and Cuba to drill about 100 miles offshore of the U.S., but not U.S. energy companies. So it doesn't really make any sense because we're almost discouraging the U.S. oil companies from drilling, yet we are allowing some of our global competitors to do that.
ROBERTS: Right.
LACAMP: So there's a really fuzzy energy policy here in the United States. Yes, the oil companies could be reinvesting some more of their profits into new exploration, but that's a really small part of the problem. ROBERTS: Jim, want to ask you one quick question here, quick answer if you could. We're at the price where we're having a serious effect on the economy. People's lifestyles. Could that lead to what's called an asset bubble and we could see the price of oil dramatically drop or is there enough demand worldwide, as you cited before, to keep those prices high regardless of what happens here?
LACAMP: Short term there has been some short covering that's kind of technical, but what it means is there's some panic buying in the market, John. And that that does suggest we could see a big short term drop. Long term, these global issues aren't going away. So if we do drop to about $100 a barrel I think that would just be a bottoming area and we'd see prices start to come back up again.
ROBERTS: All right. Jim Lacamp for us this morning. Jim, good to talk to you. Thanks very much.
LACAMP: Always a pleasure.
ROBERTS: Kyra?
PHILLIPS: With the price of gas climbing, what's the fastest and cheapest way to commute? We're sending three of our correspondents on a great race to find out.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE REPORTER: We're at the Bethesda Station.
UNIDENTIFIED MALE REPORTER: Connecticut Avenue is moving well.
UNIDENTIFIED MALE REPORTER: Right now I'm cutting underneath some of the heaviest traffic.
UNIDENTIFIED MALE REPORTER: We are two blocks away now. We are in really good shape.
(END VIDEO CLIP)
PHILLIPS: And you may be surprised to see who made it to work first. The State Department correspondent, the Pentagon correspondent, or maybe the State Department correspondent. There we go. There's Richard Roth. Actually, Tom Foreman.
(COMMERCIAL BREAK)
PHILLIPS: Well, the price of gas hit an all-time high today, $3.83 a gallon, and it makes you wonder if there's a cheaper, faster way that you could be getting to work.
Well, CNN's Zain Verjee, Tom Foreman and Jamie McIntyre decided to commute to our Washington Bureau by car, train and bike to see who would make it to work first. Check it out.
(BEGIN VIDEOTAPE) ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: I'm going to beat these two boys by taking the Metro to the bureau. One -- a little bit of a walk and one straight shot.
JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: I'm driving and I fully expect to be thwarted by Washington rush hour traffic.
TOM FOREMAN, CNN CORRESPONDENT: I'm going on the bicycle.
VERJEE: OK. We're at the Bethesda Station. It is 8:46 in the morning. It's going to cost me $2.90.
MCINTYRE: Connecticut Avenue is moving well. We've got a shot at this.
FOREMAN: Right now, I'm cutting underneath some of the heaviest traffic that's above this tunnel that I'm in.
VERJEE: It is 9:05, not too crowded. Wonder how Foreman is?
FOREMAN: This is where you love it. Everybody is caught in traffic and you just go smoking right past them.
MCINTYRE: We are really in the homestretch now. If this car would just go. Go, buddy, go. Come on. We're in a race here for crying out loud.
VERJEE: Here we are, Union Station, and it's 9:50.
MCINTYRE: There is CNN. You haven't seen Tom Foreman or Zain Verjee, have you? All right.
VERJEE: 9:21.
FOREMAN: I was getting killed on time here.
MCINTYRE: Thank you, thank you. Once again fossil fuels win out.
VERJEE: Whoa! I won.
FOREMAN: I fear we have lost. When did you guys get here? Like five minutes ago? Because I'm thinking --
VERJEE: He beat me by eight minutes.
FOREMAN: Really? How did you beat her?
MCINTYRE: Took the back way.
FOREMAN: How much did we spend on our commute today? I'm going to start -- let me start the bidding at zero.
VERJEE: $2.90.
MCINTYRE: It only took me about $4, maybe a gallon of gas to get here.
FOREMAN: Do you know what the best thing is -- options.
MCINTYRE: Jamie McIntyre.
VERJEE: Zain Verjee.
FOREMAN: Tom foreman, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: OK. It may have cost Tom Foreman zero, but guess what? He smells. He biked to work and was sweating. The other two, you know, they're good to go for the day.
ROBERTS: I didn't know he smells.
PHILLIPS: You can see more of the great race to the CNN Bureau today at noon on "ISSUE # 1" with our own Ali Velshi and Gerri Willis.
ROBERTS: Well, there you go. Take the convertible. It gets you there more quickly.
PHILLIPS: A little more air.
ROBERTS: Geez, what does that say about the environment?
New look for Senator John McCain's wife Cindy. It's turning an awful lot of heads.
PHILLIPS: Including ours.
(BEGIN VIDEO CLIP)
CAROL COSTELLO, CNN CORRESPONDENT: Ooh-la-la, Cindy McCain in "Vogue" magazine looks spectacular. Feet bare, wearing size zero jeans. She projects an image quite unlike the Cindy McCain we see on the campaign trail.
(END VIDEO CLIP)
ROBERTS: See why a potential first lady wanted to turn cover girl, coming up.
(COMMERCIAL BREAK)
ROBERTS: She is a constant on the campaign trail. Cindy McCain with her husband, presumptive Republican nominee John McCain. She is now turning heads with a new look. Appearing in "Vogue" magazine in more casual garb -- jeans. Could the image sway voters who might not know that much about her? Our Carol Costello takes a look.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): Ooh-la-la, Cindy McCain in "Vogue" magazine looks spectacular. Lounging at her seaside condo sans John McCain, feet bare, wearing size zero jeans. She projects an image quite unlike the Cindy McCain we see on the campaign trail
SUSAN MACMANUS, UNIVERSITY OF SOUTH FLORIDA: So far, Cindy McCain has been low key. She's been sort of taking the traditional role of standing by her husband's side at events and clapping and smiling and being supportive of her husband.
COSTELLO: A role critics say makes Mrs. McCain look like -- well, Glenn Close in the movie "The Stepford Wives."
GLENN CLOSE, "THE STEPFORD WIVES": Well, that's all marvelous.
GLORIA ROEMER, REPUBLICAN CONSULTANT: Well, you know, there's that saying that's been going on for years, you know, "Don't hate me because I'm beautiful," and that may apply here because, you know, she is very attractive. You know, she can't help it.
COSTELLO: Rumors say Mrs. McCain's exterior belies who she really is. Mrs. McCain isn't perfect. She suffered a stroke four years ago and worked hard to overcome its effects. She donates tons of time and money to charitable causes. What voters do know about her -- well, she's enormously wealthy. And she says she won't release her tax returns ever, which says to voters you're not one of us. Hence "Vogue" and the jeans.
MACMANUS: Jeans are as all-American as apple pie. And in the fashion world, no matter what they look like, they're in fashion. And so it's no surprise that Cindy McCain would choose a spread with jeans and a nice shirt.
COSTELLO: Interestingly, while Cindy McCain chose jeans for her "Vogue" spread, her likely competitor, Michelle Obama, chose a traditional black dress with pearl earrings for her "Vogue" spread. As the Washington Post described it, it was as if Michelle Obama was saying "I am not some scary other; I am Camelot with a tan.
Whether these images will sway voters one way or another remains to be seen. But we're still in the getting-to-know you stage.
(on camera): In short, expect both would-be first ladies to be much more visible in the future so we can get to know them. Carol Costello, CNN, Washington.
(END VIDEOTAPE)
ROBERTS: Got to admit she looks terrific in that.
PHILLIPS: She looked fantastic.
ROBERTS: Just great.
PHILLIPS: Well, he's known as the fastest man with no legs. We're going to talk with double amputee Oscar Pistorius, whose Olympic dreams are still alive even though some say his legs give him an unfair edge. You can see for yourself straight ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
ROBERTS: Eight minutes to the top of the hour now. For a check of our Quick Vote question this morning, we're asking who or who is to blame for sky-high oil prices. Right now 32 percent of you say it's oil companies, 10 percent blame OPEC, 32 percent think it's the government's fault and 26 percent say consumer demand is behind the spike. Head to CNN.com/am and cast your vote this morning.
PHILLIPS: You can also send us an e-mail, tell us why you think prices are so high, and if you have an idea on how to help, just let us know. Again, that's CNN.com/am. You can just click "e-mail us."
Power play. Big oil blasted on Capitol Hill.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: You rack up record profits, and apparently have no ethical compass.
UNIDENTIFIED MALE: Is there anybody here that has any concerns about what you're doing to this country?
(END VIDEO CLIP)
PHILLIPS: They make billions off record high gas prices, and they blame you?
Plus, making it count.
(BEGIN VIDEO CLIP)
SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: We cannot have a nominee who only represents 48 out of 50 states.
(END VIDEO CLIP)
PHILLIPS: Hillary Clinton tries to rewrite the rules in Florida. Will the voters see it her way? Ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
ROBERTS: Four minutes now to the top of the hour. Try to reach new Republicans with the Democrats on the verge of demolishing a race or gender barrier. The GOP is looking for more minorities to fill out its roster in the future. CNN's Chris Lawrence has got more.
CHRIS LAWRENCE, CNN CORRESPONDENT (on camera): John, there's no doubt the Republican Party has a problem attracting minority candidates to run for office. The big question is whether the GOP is in any shape to do anything about it.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): The Republican Party is suffering a deficit of diversity. While dozens of African-American Democrats hold seats in Congress, the GOP is going on six years with no African- American governor or member of Congress.
JOE HICKS (R), FORMER LOS ANGELES CITY OFFICIAL: It's not. It's not a healthy party.
LAWRENCE: Republican and former Los Angeles City official Joe Hicks says the party is low on money and fighting to hold seats in Congress. To get competitive minority candidates, the Republican brand would have to be strong enough to attract up and comers.
HICKS: The party is just not in that kind of position right now to argue.
LAWRENCE: Especially since Republicans recently backed Pennsylvania's Lynn Swann and Ohio's Ken Blackwell and both lost their bids for governors.
(on camera): Some Republican say the party is not in any shape for any major outreach effort, that right now it's just got to worry about winning races.
WALT ALLEN (R), COVINA CITY COUNCIL: I beg to differ. We need to deal with the minority candidate recruitment now. We can't wait.
LAWRENCE (voice-over): Suburban City Councilman Walt Allen says look at Barack Obama, who started at the local level 20 years ago. Allen says there are potential Republican Obamas out there, but they need national help.
ALLEN: You need a good consultant. You need to be credible, so endorsements help with that. You need money and all of that trickles down from the national to the local.
LAWRENCE: Joe Hicks says Republicans need to emphasize core values like low taxes instead of social issues like gay marriage.
HICKS: I think the party has drifted into areas that frankly has allowed itself not to be appealing to a 19-year-old who may be considering politics, might want to run somewhere down the road.
(END VIDEOTAPE)
LAWRENCE: Everyone agrees there's no quick fix. And that even if Republicans started seriously cultivating minority candidates right now, you wouldn't see the effects on the big national races for another 10 to 15 years.
John?
ROBERTS: Chris Lawrence for us this morning. Chris, thanks.
Your money is issue no. 1. And this morning, you are forking out more of it for gasoline. For the 15th straight day, gas hit a new record high. Now above $3.83 a gallon.
Oil also at a new high this morning, over $135 a barrel. It's making everything more expensive, including your next flight. American Airlines now wants to charge you $15 to check your first, your first bag.
Alina Cho is live at New York's LaGuardia Airport with more on this.
Alina, your first bag?
ALINA CHO, CNN CORRESPONDENT: Yes. It's hard to believe, isn't it? And reviews interestingly here at LaGuardia have been mixed. You know, American says there's a reason for it. They say it's going to cost an extra $3 billion to fly this year all because of soaring jet fuel prices.
So American is going where no airline has gone before. Charging passengers starting June 15th to check their first bag. Here is how it breaks down. $15 to check the first bag, $25 for the second bag, and here is where it gets interesting, $100 for that third bag. That means a family of four traveling to Disney World, it will cost an extra $60 minimum each way.
Now, we've heard about that before, but we haven't -- we may not have heard about this. You know, the flying public certainly has been mixed about this. Here's what they had to say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I would rather them charge more for the flight than the bags. It's understandable that gas prices are going up, but right now (INAUDIBLE).
UNIDENTIFIED MALE: Short term. American Airlines is losing money. Got to make it somehow.
UNIDENTIFIED REPORTER: So you think it's fair?
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED REPORTER: Really?
UNIDENTIFIED MALE: Pay for pounds. They should charge me extra for being fat.
(END VIDEO CLIP)
CHO: That's essentially what America is going to do. Pay more for the pounds. And now, American is also cutting flights by 11 percent to 12 percent. That means there will be layoffs as well. But you know, the flying public simply is not used to this. We're used to paying $8 for a sandwich, maybe $3 for that trail mix? But how about this for hidden fees? Have you heard about this? You want more leg room on JetBlue?
