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THE SITUATION ROOM

Texas Prepares For Monster Storm; Sarah Palin Speaks Out

Aired September 12, 2008 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you are in THE SITUATION ROOM.
Happening now: the breaking news we are following, this colossal force of nature threatening Texas. Hurricane Ike could release devastation in Galveston and elsewhere within only a few hours. And residents are warned, leave or possibly face certain death.

Forecasters fear walls of water, rough winds and pounding rain. More than one million people have left or are leaving their homes. They're fleeing for their lives right now. It is a little late, but they are desperate.

And in presidential politics, a story we are not leaving either. We are awaiting a live event with Senator Barack Obama. Will he fulfill his campaign's new promise to swing harder at his rivals? All of that coming up, and plus the best political team on television.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer. You are in THE SITUATION ROOM.

A storm about the size of Texas threatening Texas. We are following breaking news of Hurricane Ike. Forecasters now say it is damage area could rival that of Hurricane Katrina's. It is crashing huge waves, and huge storm surges and widespread flooding are major, major fears.

Ike right now a Category 2 storm with winds near 105 miles an hour, but forecasters say, flatly, it still could grow to a Category 3. Today, more than 60 people who were stranded were rescued by helicopters. Meanwhile, Ike is tossing a massive freighter in the Gulf of Mexico -- 22 people are stranded there and rescue officials say it is impossible to save them right now. You just heard from Captain Diehl in the -- of the U.S. Coast Guard.

CNN has teams all across the threatened areas covering every single angle, but let's get the latest forecast.

Chad Myers, our severe weather expert, at the CNN hurricane headquarters is standing by.

Chad, I am really worried about what is about to happen along the Texas coast, not only in Galveston, but in Houston as well.

CHAD MYERS, CNN METEOROLOGIST: Absolutely. And now, for the first time, with this storm in a very long time, probably since it has left Cuba, we have a very defined and distinct eye right there. So, we know that this storm is intensifying right now with its eyewall that will shrink in size and become even stronger. Therefore, the winds will become stronger as this rolls onshore tonight.

And, Wolf, like we have nothing else to worry about, well, we have tornado warnings with tornadoes on the ground in Kansas. And they are just south of -- well, about 10 miles south of K.U.'s campus, but heading into Kansas city if it keeps going. So, you up in Kansas city, you need to watch for something else.

Back to this hurricane, about 120 miles or so from Galveston. Now, 1:36 was a few hours ago. The whole area is spinning and it's going up into Galveston. It's going to up into the Houston Ship Channel, and you are going to take, you're going to take this water. Think about a bucket, Wolf, that is five -- well, three feet in diameter, so you can pick it up. But put one foot of water in that three-foot bucket.

Now think of how tall a one-foot bucket would have to be to dump all of that water from that three-foot bucket into a one-foot diameter bucket and it would start to rise feet after feet after feet. That is kind of what we are doing. We're taking all of this Gulf of Mexico water and we're pushing it into a very small Galveston Bay, which is very shallow. It's only like five feet deep except for where they cut for the ship channel, so they can go back and forth.

And this is the problem we're going to have. And I have now seen -- I have seen some estimates from the Hurricane Center from what is called the slosh model that I was very familiar when I worked for the Weather Service that now some of these tides can be 31 feet tall today. This slosh could be 31 feet tall...

(CROSSTALK)

BLITZER: Wow, because we know that the seawall in Galveston is only 17 feet high.

(CROSSTALK)

MYERS: Here it comes. Here it comes.

(CROSSTALK)

BLITZER: This is an animation that is showing what could happen to Galveston. Explain what we are seeing.

MYERS: This is the water. This is the wave of water that is going to come over the top of Bolivar Peninsula, right through the Galveston ship channel, and then up here toward Chambers. That county up there is just going to be slammed, because it is on the northeast side of the eye. That's what we always talk about. That right side of the eye is going to be the worst. But we are going to push -- those numbers are very hard to read, but 17, 18 feet right up into the bayous of Houston. And if you are anywhere below that level, you are going to get water in Houston proper, because of those drainage ditches that they call bayous and we will watch those go up all night tonight, 100-mile-per-hour, maybe 95- mile-per-hour winds in downtown Houston. That will break all kinds of glass in downtown Houston with those high-rise buildings.

Remember, Wolf, the winds that were measuring that we're talking about are at the surface. You go up 100 feet, you go up or 10 or 15 stories, that wind is going to be 10 miles per hour higher than that, so that is why we are going to break so many windows in downtown Houston.

BLITZER: All right, Chad, stand by for a moment.

I want to go the Galveston. I want to go to that seawall right now. Gary Tuchman is our man there. He is courageous. He is still there.

Gary, you heard just Chad say that the water is about to inundate not only that seawall, but virtually the entire area of Galveston.

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Right. No question about that, Wolf. We have been hearing that for two days. And everyone who is here -- and that includes about 15 to 20 CNN personnel -- we all know that. We are in a safe hotel that is 15 stories high.

But, yes, where I'm standing right now, we won't be standing in a few hours. It will not be safe to stand here.

One thing I want to tell you, earlier, we were talking about a fire at a storage facility. What we found out, Wolf, is, there is a fire at a boat storage facility. That is 200 acres big. Firefighters can't get to it. They're letting it burn itself out. But it is a boat storage facility. Nobody has been hurt in that fire, as far as we know.

But here, this seawall, this seawall was built decades ago and it was built to protect Galveston, population 57,000. And this population has remained pretty constant over the last century. It was built there after the hurricane of 1900, September 8, 1900, where up to 8,000 people were killed when a hurricane came through Galveston, the worst natural disaster in United States history.

That seawall was built. It is about 10 miles long. It protects Galveston, but over on this side, where I am standing, when you go in that direction, there is no seawall at the end of the Galveston Island. That is the southwest portion of the island. And much of that portion of the island is already under water, despite the fact that the rains are just starting to start right now.

We have had this water coming over the seawall for hours. It has not been raining and they are already having flooding here. And that is why they are so concerned about Galveston Island, about 40 miles to the southeast of Houston -- Wolf. BLITZER: All right, Gary, I want your photographer, if he can -- I don't know if he is hearing me -- if not, you tell him -- to pan over to that hotel on the other side of the wall where you and where you and our crew and other journalists are going to be heading for safety pretty soon.

And I want Chad Myers to join us.

Chad, you are looking at this hotel. It looks very sturdy, looks very safe.

When the water eventually gets over Galveston, how high will that water be, based on what we estimate right now?

MYERS: Well, you are talking about the wall, and then you are talking about a lift up to this building, literally a manmade dirt berm that gets this building another 20 or so foot on top of the wall itself. So, probably the tallest, highest structure in Galveston right there, and a strong one as well, but those windows are going to start breaking.

I did not want to have crews on the island. I got overruled. I really wish everybody would be off of that island. And, obviously, if you are not staying in that hotel, you are not going to be as safe as anybody in that hotel. But the managers and the EEOC guys are going to be in that building as well, so I deferred and said, well, if the emergency managers are going to stay there, they probably know pretty good that building is constructed.

BLITZER: Will that water reach where that truck is, that satellite truck, that is parked in front of that hotel, atop that little hill there?

MYERS: Well, the problem is, Wolf, is that we are going to have this surge that is going to come up probably another 12 feet.

The problem is that there's going to be 18-foot waves on top of that 12-foot surge. So, that truck is going to get some saltwater in it tonight.

BLITZER: All right. Stand by. I want everybody to stand by.

I want to go the Houston right now. It's an area of about four million people, two million in the city of Houston, another two million in the greater Houston area. And once this storm moves over Galveston, it's moving directly toward Houston.

That is where Anderson Cooper is standing by right now.

Compared to what is going on in Galveston, along that seawall, it looks relatively calm, but deserted behind you, Anderson. Set the scene for us.

ANDERSON COOPER, HOST, "ANDERSON COOPER 360": Yes, it is a very strange feeling, and a lot of people here have just been glued to their televisions all day. We have seen long lines at gas stations, long lines at grocery stores, at Wal-Mart, places like that, Home Depot, people just stocking up on supplies, because they really have no sense of exactly how bad it is going to get here in Houston.

Now, we have been told to expect hurricane-force winds some time around 2:00 to 3:00 a.m. That's really when the hurricane-force winds are going to start hitting in Houston. Obviously, as you have just been hearing from Gary Tuchman, going to happen a lot sooner in Galveston.

What the fear is here is not so much flooding, though there are some low-lying areas that flooding could be a problem. It is really the wind, the impact of this wind whipping through downtown streets, hitting these buildings, these high-rises, a lot of glass, as you know, in Houston, so we are going to have to be very careful about falling debris, debris that gets pick up in the air and kind of whipped around.

We are being very careful about our location. We have been kind of scouting about. We had a big debate about whether to go to Galveston. We want to be able to stay on the air through the entire storm, two hours anchoring on "360" tonight. So, we wanted a location that would give a sense of the storm, but be secure enough.

We have actually found this parking structure connected to a hotel that, if an emergency, things get really bad, we can retreat inside into the parking structure. That's usually -- you try to have kind of some fallback positions when covering a hurricane like this.

But, at this point, hurricane-force winds are anticipated in Houston around 2:00 or 3:00 a.m. And most people, as you know, Wolf, were told yesterday, you know what? Shelter in place. Don't start jamming on to the roads. All those millions of people here in Houston, they didn't want them moving north, moving in other directions, getting on the roads and causing accidents.

So, people are told to just shelter in place, and that is what most people, it seems, here are doing. And we are just watching this thing very, very closely and waiting for it to come -- Wolf.

BLITZER: And I assume that power -- if you have a personal generator, you can have some power, but I assume, for most of that area, they have it. Right now, they have power. They are about to lose power.

COOPER: We are anticipating losing power at some point. When it's going to happen, it is hard to tell. In New Orleans, in Gustav, a couple of weeks ago, we had power up until a couple hours into the storm.

So, you never really know when it's going to blow out, but, again, we have a generator. We will be able to at least stay on the air, you know, but we are anticipating, you know, lack of food in the hotel, places -- you know, everyone basically just trying to stock up on supplies and get as ready as best they can.

A couple of people I know I have talked to have their own generators, but most of stores -- certainly, all of the stores are pretty much closed and boarded up. But there is one bar that is open. They said they are going to try to stay open as long as they can, but just about everything is shut down here.

BLITZER: And we spoke to the mayor, Bill White, of Houston a little while ago, Anderson, and a huge concern, those high-rises and those glass windows of the structure. I don't know if they have shutters or if they're hurricane ready, if you will, but there is going to be a lot of shattered glass all over downtown Houston and the entire area.

COOPER: Yes. This is the really the first time since Katrina that we have seen a major hurricane like this hitting a major metropolitan area. We saw what happened in Katrina. Folks in Houston here are just bracing as best they can.

BLITZER: Anderson, there is an animation I want to show our viewers of what they're projecting the surge, the flooding, what it could be in the entire Texas Gulf Coast/Louisiana area. And you can see -- and our viewers are seeing it right now -- I don't know if you are able to see CNN, but it looks pretty awful, as the water simply goes up on the land and moves inland in a pretty, pretty potentially devastating way.

COOPER: Yes, you know, I have been told not to expect so much water in the downtown area of Houston. Really, the more danger is from wind.

And as you talked about the flying debris, it would be interesting to hear from Chad what the water situation, the flooding situation might be on the ground in Houston. I know there are some low-lying areas. Some of the outer areas are low-lying.

But as far as I understand, it is the wind that is the biggest concern here.

BLITZER: Well, let me see if Chad is still there.

Chad, are you still there?

MYERS: Certainly, Wolf.

(CROSSTALK)

BLITZER: All right. Do you want to answer Anderson's question?

MYERS: Well, you know what? The water is going to up the Buffalo Bayou. It's kind of this ship channel that runs into downtown Houston.

And anybody that is in Houston proper, but certainly Pasadena, Deer Park, La Porte, all the way down to Bacliff, that is the area that is really going to be inundated with water. Downtown Houston probably high enough to not get a lot of this backwashing water so to speak coming up the ship channel, but, Anderson, there could be 10 inches of rainfall there in Harris County, and that could cause flooding with freshwater.

BLITZER: Anderson, we also have video of when you were driving in the area today. And we are going to show it to our viewers.

But tell us what you were seeing as you were driving around the area.

You know, we have seen a lot of stuff. Again, we have seen long lines on the roads. We have seen stores, you know, quickly, trying to board up. We talked to a bar owner this morning. He had a bunch of guys with plywood trying to board up. We have seen all of the kind of stuff you see in preparations for a hurricane.

People here are very experienced with storms. They are, you know, heeding the warnings, it seems like. Everyone we talk to seems to be heeding the warnings. You still see a couple people kind of walking around here in downtown Houston, walking their dogs. But it is the proverbial calm before the storm at this point. And people have a good sense of what is coming.

BLITZER: Stand by for a moment, Anderson.

I want to go back to Gary Tuchman. He is in Galveston, where I am told, Gary -- and you can correct me if I am wrong -- the winds are now picking up. You are beginning to feel some of the tropical-storm- force winds?

TUCHMAN: Right. Not only are we feeling the winds, though, Wolf. For the first time, the rains are starting to come down heavily. And really right now it is 6:12 Eastern time. And it was not until about 6:00 that we started feeling the heavy rain.

So, it looks like these are the first major outer bands coming in, but we have to keep in mind this hurricane, the eye is not supposed to cross for another eight hours maybe. And you have these conditions right now in which many of the streets in Galveston are flooded. And the seawall which is 17 feet high, you have the water coming over it regularly now.

And you have people who are very concerned here, and they have every right to be, because Galveston is a very vulnerable place. They have been very lucky for the last quarter century, have not been hit by a major since Hurricane Alicia, which also hit where Anderson is, Houston, very hard, killed 21 people, billions of dollars to this part of Texas.

But they have been really lucky since then in this area. And it appears -- and I don't mean to sound so foreboding, but it appears their luck has run out.

BLITZER: Gary, I just want you to update our viewers. We got some new pictures of that fire that erupted not far away from you in Galveston. And we're going to show it courtesy of our affiliate. But tell us what we know about this fire right now, because the smoke was really ominous just a little while ago.

TUCHMAN: Right.

We're going to give you a look in that direction right now where we saw it before. And you cannot see the smoke anymore, not because the smoke is gone, but because the conditions have deteriorated since we first saw it. But we saw these black clouds that were very unusual for a hurricane system. Turns out it was smoke from a boat storage yard. We have been told it's a couple of hundred of acres, the facility, and that firefighters cannot get to it, they aren't able to get to it, but that nobody appears to be hurt, so, therefore, they are letting the fire burn itself out.

That's good news. Fires are very common. People don't really think about it, because hurricanes involve lots of water. You don't think of fires, but fires are very common during hurricanes, because of the major problems you have when structures are toppled and when things are broken. And it's something firefighters have to worry about, particularly when you have the conditions where the winds are tropical-storm-force or hurricane-force. They can't get to the sites, so they have to worry about the situation of fires burning themselves out with no firefighters to fight them.

BLITZER: All right, Gary, be careful over there. We're going to check back with you.

Anderson, we will check back with you. I know you have a big show coming up at 10:00 p.m. Eastern, "A.C. 360."

Anderson is going to be live throughout the night, watching this monster storm come shore.

We're going to be not going away from this story for very long. Chad Myers is going to be with us as well.

And we are also watching that daring rescue effort that was just called off, the Coast Guard and the U.S. Air Force trying to reach 22 people aboard a huge freighter adrift in the Gulf of Mexico. It is now mission impossible. And we will tell you why.

And this note: We're waiting for Senator Barack Obama. He is about to make remarks in a key battleground state. He is pushing back hard today against John McCain. We also anticipate they will be speaking out on Hurricane Ike. Stand by for that.

And John McCain goes on a popular daytime TV show to strongly defend some of his recent attack ads.

Lot of news happening. We are watching both of these stories, Hurricane Ike, the breaking news, the race for the White House -- much more coming up right here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We are going to get back to the hurricane in a moment. But these are live pictures from Concord, New Hampshire. It's a key battleground state. Senator Barack Obama about to speak there. We are going to go there live as soon as we see him. Stand by for that. In the face of some sharp attacks from John McCain's campaign, Obama is now ratcheting up his counteroffense. He is in the battleground state, as you see, of New Hampshire.

Candy Crowley reports from Concord.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): The grace of unity on 9/11 was gone by daybreak on 9/12. A memo to supporters from the Obama campaign blasted John McCain for gutter politics, charging him with smears, lies, and cynical attempts to distract from the issues.

This was followed by word of a couple new ads, one designed to show McCain as out of touch.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

NARRATOR: He admits he still doesn't foe how to use a computer, can't send an e-mail, still doesn't understand the economy.

(END VIDEO CLIP)

CROWLEY: Obama took up the theme on the campaign trail in New Hampshire, quoting John McCain, who said, it's easy in Washington to become divorced from everyday problems.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Maybe, from where he and George Bush sit, maybe things do look fundamentally sound. Maybe they don't see what's taking place. Maybe they're that out of touch. But I do see what's going on. And so do you.

CROWLEY: Still, at the same forum, Obama, praising the work of mayors, also questioned his day job.

OBAMA: The mayors have some of the toughest jobs in the country, because that's where the rubber hits the road. You know, we yak in the Senate.

CROWLEY: The Obama campaign is calling this the first day of the rest of the campaign, and is promising to respond with speed and ferocity to any assault, yet another pledge to calm fretful Democrats worried that Obama is not tough enough for hardball.

UNIDENTIFIED MALE: So, for those of us that have given you our support and, more importantly, our money, when and how are you going to start fighting back against attack ads and the smear campaign?

(APPLAUSE)

OBAMA: I have to tell you, our ads have been pretty tough.

(APPLAUSE)

OBAMA: I know there are a lot of Democrats and some independents and some Republicans who really want change who start getting nervous, because they have seen this movie before every four years.

(END VIDEOTAPE)

BLITZER: Candy Crowley reporting from Concord.

Remember, as soon as we see Senator Obama at this rally, we are going to go there live. We understand he is going to be speaking about Hurricane Ike as well.

Meanwhile, Senator McCain acknowledges politics is a tough business, but he asserts in no way will he be backing down. He even went on a popular TV show today and defended what one questioner called McCain campaign -- quote -- "lies."

Let's go to Mary Snow. She is working this story.

The target audience for Senator McCain, Mary, the target audience was women.

MARY SNOW, CNN CORRESPONDENT: It was, Wolf. And Senator McCain was grilled on a number of topics, from attack ads, to his vice presidential pick, to abortion.

(BEGIN VIDEOTAPE)

SNOW (voice-over): The setting may have been casual, but the questions were tough as Republican presidential hopeful Senator John McCain sat down with the five female hosts of ABC's "The View." He was pressed on his credentials as a maverick and Sarah Palin's record of reform.

(BEGIN VIDEO CLIP, "THE VIEW")

BARBARA WALTERS, CO-HOST: What is she going to reform specifically, Senator?

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Well, first of all, earmark spending, which she vetoed a half a billion dollars worth in the state of Alaska.

WALTERS: She also took some earmarks though.

MCCAIN: No, not as governor she didn't. She vetoed -- well, look, the fact is that she was a reform governor.

(END VIDEO CLIP)

SNOW: As Alaska's governor, Palin has cut earmarks Alaska asked for, but she didn't turn her back on them completely. In this fiscal year, Alaska is asking for almost $200 million worth.

McCain was also grilled on his campaign's recent ads targeting Barack Obama. One focus is on the "lipstick" controversy. The other claims Obama advocated teaching sex ed in kindergarten.

(BEGIN VIDEO CLIP, "THE VIEW") JOY BEHAR, "THE VIEW": We know that those twos ads are untrue, they're lies. And yet you at the end of it say, "I approved this message." Do you really approve them?

MCCAIN: Actually, they're not lies. And if you've seen some of the ads that are running against me...

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, "THE VIEW")

SNOW: When wife Cindy McCain joined him on stage, she pushed back.

WALTERS: How many houses does he have -- do you both have?

CINDY MCCAIN, JOHN MCCAIN'S WIFE: You know something, that's not part of this campaign.

(END VIDEO CLIP)

SNOW: After "The View" came a taping for "The Rachael Ray Show." The two female-oriented shows come as McCain is making some inroads among white women after choosing Palin as his running mate.

ALAN SILVERLEIB, CNN, SR. POLITICAL RESEARCHER: John McCain has gained four points among white women. He now leads Obama among white women 56 to 41 percent. SNOW: But among all women, polls show McCain still lags Obama. Some political observers say shows like "The View" could help McCain soften his image.

LARRY SABATO, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: A lot of McCain's problem with women is his hawkish image, and the hawkishness is reinforced by his policy positions on issues like Iraq.

(END VIDEOTAPE)

SNOW: And while speaking to largely female audience of "The View," McCain sang Senator Hillary Clinton's praises, citing that he has worked with her in the past and vows to work with her in the future -- Wolf.

BLITZER: He is clearly reaching out some of those disappointed Hillary Clinton supporters in the process.

Mary, thanks very much.

Remember, we are standing by. We're awaiting Senator Barack Obama in Concord, New Hampshire. He is about to speak there. We will go there live in a few moments.

Also, a call for help and a urgent rescue effort -- a freighter stranded in the path of the storm with 22 people aboard, why a rescue mission, right now, at least, is not possible.

Also in the path of the storm, a quarter of America's oil refining capacity -- what a direct hit could mean for all of us.

And a city built at sea level -- some Galveston residents have been warned to flee or face certain death. We are on the scene for you -- this storm, this monster is getting closer and closer.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: A killer storm sends out a wall of water that could top 20 feet. Hurricane Ike takes direct aim at Galveston, Texas, where some residents have been warned to flee or die.

Sarah Palin, part two. She took heat for her national security comments. We are standing by to see what else she is saying, what she is saying right now.

And Barack Obama goes on the offensive fighting back against recent attack ads. We are standing by to hear directly from Senator Obama. He is in New Hampshire. We will go there live in a few moments -- all of this coming up, plus the best political team on television.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

But, first, let's get caught up right now on Hurricane Ike. The Category 2 storm is about 125 to 135 miles southeast of Galveston, Texas. It is expected to make landfall later tonight, possibly after midnight, as a Category 3, potentially, a Category 3. Ike could bring a dangerous storm surge of at least 20 to 25 feet, maybe even higher.

Keep in mind, Galveston's seawall is only 17 feet. It is estimated that Ike could cause $15.3 billion in damage. That's an estimate. Millions of buildings and nearly 15 million people are in the storm's potential path as it moves inland.

Also in the storm's way, Texas' refinery row. The state is home to 26 refineries and they alone process nearly five million barrels of crude oil every single day. Indeed, much of the nation's refining capacity is in the path of Hurricane Ike.

For some more on what's going on, let's go to our senior business correspondent, Ali Velshi.

He's in Baytown, Texas right now.

That's where a lot of these refineries are -- Ali, it looks relatively calm where you are.

What's the danger to the nation's oil supply?

ALI VELSHI, CNN CORRESPONDENT: The danger to the oil supply right now is not necessarily the wind. It's the fact that power is going to go out. These places could flood. And that's how you get your gasoline.

We're seeing spikes across the country already.

Take a look over my shoulder. You can see those flares coming out of that smokestack. That is Exxon Mobil's Baytown refinery. That is just one little small part of the biggest refinery on the continent. It is shut down. Those flares are the excess hydrocarbons that are burning off so that they don't -- they don't pressurize and it doesn't become dangerous.

Across this state, 13 of the 26 refineries are shut down. That means the oil that is coming in from the Gulf of Mexico, that's shut down, too. But they can't -- when that oil comes in, they can't turn that into gasoline to go to your gas station.

So we've seen shortages around this part of the country. But in Florida, in North Carolina -- all across the country, we've seen major spikes, some as much as 50 cents, with some gas stations charging more than $5 a gallon.

Now, we have to wait until this storm has passed, Wolf, to see the damage is. If it's just a matter of some flooding and some power going out, they can clean that up and get these refineries back online.

But you'll remember, after Katrina and Rita, there were refineries that were damaged to the point that they we were out of service for between three and six months. And that will have a long- lasting effect on gas prices across the country.

So for now, this is something that people across the country will be concerned about, because one quarter of this nation's refining capability to turn oil into gasoline is right here in the State of Texas -- Wolf.

BLITZER: So the price of barrel, the worst case is that really could go up?

VELSHI: Yes. And because this storm is not as challenging to the offshore oil production, because the rigs can withstand this sort of a storm. It's not as strong as Katrina and Rita were. But the danger here is the refineries. So you might even see the price of oil not surge, but the price of gas jump very quickly. And when I say very quickly, I'm talking about...

BLITZER: So...

VELSHI: ...for those people who haven't already seen it, by tomorrow morning or Sunday.

BLITZER: So let me rephrase the question. Not necessarily the price per barrel, but the price at the pump -- heating oil, gasoline...

VELSHI: That's right.

BLITZER: That could really go up if, in fact, something bad happens to these refineries?

VELSHI: That's right. Yes. It's distilled products. And, again, those are the gasoline, diesel, heating oil. That stuff is also refined here and piped across the country. So you may be in New Jersey or California thinking this won't affect you, but it could. We'll be keeping a close eye on that throughout the storm -- Wolf.

BLITZER: All right, Ali.

Stay safe over there.

Thank you.

Right in the path of Hurricane Ike, a 584-foot freighter. The Antalina, as it's called, is disabled and adrift in the Gulf of Mexico. The U.S. Coast Guard is flying over the vessel. Twenty-two members are stranded aboard.

Let's listen in to this call with the ship's captain.

(BEGIN AUDIO CLIP)

UNIDENTIFIED FEMALE: OK. Is it -- did the helicopter land on the -- on the ship?

UNIDENTIFIED MALE: (INAUDIBLE) on the ship.

UNIDENTIFIED FEMALE: Are the winds strong, sir, around the ship?

The winds -- do you have a lot of winds?

UNIDENTIFIED MALE: (INAUDIBLE). Please. Help me a moment, please. I am very busy.

UNIDENTIFIED FEMALE: Is everybody OK on the ship?

UNIDENTIFIED MALE: Yes, everybody is OK.

UNIDENTIFIED FEMALE: And are -- are you anchored?

UNIDENTIFIED MALE: We are on (INAUDIBLE) sea. We are on the (INAUDIBLE) the ship is still not (INAUDIBLE).

UNIDENTIFIED FEMALE: OK, sir. One more question.

Do you have any power now?

UNIDENTIFIED MALE: Oh, yes.

UNIDENTIFIED FEMALE: Oh, wonderful, wonderful. And you have so far seen one American helicopter trying to help you?

UNIDENTIFIED MALE: Yes.

(END AUDIO CLIP) BLITZER: The Coast Guard and the U.S. Air Force tried to rescue the crew, but the winds we were simply too powerful. The Coast Guard is keeping in contact with the ship. We're hoping for the best. All right. Take a look at this now. These are pictures of that sea wall that protects Galveston. It's about 17 feet high but, you can already see the water. And it's been going on like this for some time.

It's going above -- it's, the surf is clearly going -- the beach has basically disappeared and that sea wall is what's keeping that water from going into Galveston right now.

We're watching this very, very closely. And we remember that a hurricane very similar to Ike brought catastrophe to Galveston a century ago.

Let's go back to Carol Costello, because, Carol, the similarities between then and now are very chilling.

CAROL COSTELLO, CNN CORRESPONDENT: You know, it is chilling, Wolf. Your heard it -- Galveston may -- parts of Galveston, anyway, under water. It's like deja vu all over again -- and not in a good way.

Back in 1900, Galveston was the Houston of Texas. It was a big city until it was literally wiped out by a hurricane. Seven thousand people died 108 years ago. We can be sure of one thing -- at least we hope that part of the history will not be repeated.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): This sea wall is the final line of defense between Hurricane Ike and the City of Galveston. The wall is massive -- 17 feet high, 10 miles long, and, in some places, 20 feet thick. And it's going to be tested.

With Hurricane Ike yet to reach the city, water is already spilling over the top. Galveston is especially vulnerable to flooding because the city itself rests right at sea level. And this wall wasn't always here. This film, taken by an assistant of Thomas Edison's, just gives a glimpse of the devastation of the hurricane that hit Galveston in 1900. Nearly 7,000 people died -- almost a sixth of the city's population.

Over a century later, it still stands as the deadliest natural disaster in American history.

Much like Hurricane Ike, the storm of 1900 moved over Cuba and intensified in the Gulf of Mexico. On September 8th, it smashed into Galveston, with winds over 100 miles per hour and a storm surge higher than 15 feet.

Author Eric Larson wrote "Isaac's Storm," the definitive book about the 1900 hurricane.

ERIC LARSON, AUTHOR, "ISAAC'S STORM": I can't underestimate the devastation. It was -- it was absolutely appalling. And you had people burning the corpses of their neighbors. It was a horrendous scene.

UNIDENTIFIED MALE: We've been watching the water cresting this seawall.

COSTELLO: Larson saw today's video of water spilling into Galveston and sees eerie parallels to 1900.

LARSON: I was watching some of the helicopter footage that was taken of the beach in Galveston and it was as though I was watching today a video recreation.

(END VIDEO TAPE)

COSTELLO: And, you know, the book is called "Isaac's Storm" because Isaac Cline was the weather man at the time, and he did a lot of things wrong, the least of which -- actually, this was the worst thing he did, Wolf, he kind of blew off Mother Nature. He thought that the hurricane would never hit Galveston. So the warnings didn't go out until it was much too late. The tragedy did do a couple of good things, though, if you can call it that. Galveston now has that sea wall we're talking about. And those who predict the weather, even Isaac Cline, learned to better predict hurricanes. But it took a great tragedy to accomplish all of that.

BLITZER: Yes. That's amazing. All right, we're hoping and praying for all the people in Galveston, whoever is left behind.

Carol standby for a moment. Abbi Tatton is looking at some I- Reports -- Abbi, hard as it is to believe, not everyone heeded the advice either get out or die. Some people decided to stay.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, and they have different reasons for it. I just spoke to one man this afternoon who said his elderly parents wouldn't leave so he's staying now with them. This are his pictures here. This is Dennis Williams from Le Mark (ph), Texas, taking pictures of streets already flooded. This is in Galveston here hours before landfall. These are the pictures he snapped earlier this afternoon.

And this is what people there are facing. This video here coming to us from George Halloran (ph), who was on the island until just a little while ago. He said right from behind this, from where he was taking the video, hundreds of homes. He said some of these homes he could see were occupied. He says he thinks they are awaiting disaster there. Recording these pictures, he said that on the way back to Houston to safety, he said that he saw many people heading south. He doesn't know why. But it looks like a lot of people not heeding these warnings -- Wolf.

BLITZER: I'm praying for all of them and hoping for the best, obviously.

Abbi, thanks very much.

We'll check back with you when you get some more I-Reports that are coming in. This note. We're standing by to hear live from Senator Barack Obama. He's getting ready to speak at a rally in New Hampshire. Once he speaks, we're told he'/s going to be speaking about Hurricane Ike, among other subjects. We'll go there live.

Plus, she's the number two on the ticket, but she's certainly getting lots of attention. We're finding out more about Sarah Palin from her own words. Analysis coming up from the best political team on television.

And the monster in the Gulf -- we're keeping an eye on Hurricane Ike and a lot more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're going to get right back to Chad Myers.

There's some breaking news -- I hate to use that word when we're talking about another natural disaster, Chad, but what do we know?

MYERS: We know that there's a confirmed tornado on the ground in the western suburbs of Kansas City -- far western suburbs, out near the Kansas City Speedway. But it was on the ground near Desoto and up here near Wilder. And it's still going to continue to move to the north.

This is where the meso cyclone or the tornado is, right there. And it's going to be moving up kind of up near Bethel, toward Edwardsville, kind of past that already and then into the Kansas City Speedway, eventually over to Stateline into Missouri, probably missing the airport, but certainly not that far from the airport.

If you're in this area, Western Kansas City or to the northern suburbs, you need to begin taking cover now -- Wolf.

BLITZER: We know there are spin-offs from hurricanes involving tornadoes.

I assume this has nothing do to with Hurricane Ike, is that right?

MYERS: No, it has nothing to do with it at all. But it has a lot to do with what Ike's going to do later on. This is a major cold front coming down from the north that Ike is going to run into eventually and maybe make (AUDIO GAP) flooding rainfall when those two collide.

BLITZER: All right, stand by.

We're going to get back to you.

Chad is working hard at the CNN Hurricane Headquarters. We're going to get back to that hurricane shortly.

But let's take a closer look now at the race for the White House.

Sarah Palin speaking out once again -- this time on the economy and domestic policy.

Let's discuss what's going on with our senior political analyst, Gloria Borger; Steve Hayes of "The Weekly Standard;" and our senior analyst, Jeff Toobin. They're all part of the best political team on television.

Gloria, the first time we saw her unscripted, really, since she became the vice presidential nominee.

And we have a clip -- a new clip -- that I'm going to play for you, this second day of interviews she's done with ABC News and Charlie Gibson.

Here, take a listen to this, what she says about earmarks, the pork barrel spending.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: It has always been an embarrassment that abuse of the earmark process has been accepted in Congress. And that's what John McCain has fought and that's what I join him in fighting. It's been an embarrassment, not just Alaska's projects, but McCain gives example after example after example.

(END VIDEO CLIP)

BLITZER: All right, basically, how do you think she did on what we've seen so far, Gloria?

GLORIA BORGER, SENIOR POLITICAL ANALYST: Well, I think she's really much more on terra firma, if you will, with domestic policy, the issue of earmarks, than she was last night on foreign policy. She's dealt with earmarks. She portrays herself as a reformer, a maverick in the mold of McCain.

I think there are some questions about the State of Alaska itself. She's governor and the request is in for $200 million in earmarks for state of Alaska.

But those aside, you know, this is firmer ground for her.

BLITZER: A lot of people who didn't hear about her until a couple of weeks ago, Steve. But you actually went and interviewed her. You've spoken to her several weeks ago -- long before she became a national figure, if you will.

What do you think?

How do you think she did?

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Well, I think she did pretty well. And I agree with Gloria, she's much more comfortable talking about issues like the economy, like earmarks, like reform.

And when I talked to her...

BLITZER: Energy, too, by the way.

HAYES: Energy, yes. That was what I was going the say. When I talked to her, we talked almost exclusively about energy. We talked a little bit about politics. And it was a fascinating discussion, because it was something that was touched on in this ABC interview last night. I was asking her, are you going to try to push John McCain -- this was before she was selected -- into coming closer to where you are on ANWAR. And I had spoken to McCain a bit earlier and he had said he was reconsidering his position.

She, again, again alluded to that last night, saying that she still believes we should be drilling in ANWAR -- the United States should be drilling in ANWAR and was going to try to convince John McCain to adopt her view.

BLITZER: Right. She didn't budge on that issue, although, Jeff, she seemed to budge on the issue of global warming and whether humans had any impact on that.

But go ahead -- Jeff.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST, "NEW YORKER" MAGAZINE COLUMNIST: A little bit. But I'm just in shock about what Gloria said about earmarks. This is a woman -- this governor has sought more earmarks than practically any public figure...

BORGER: But that's what I said.

TOOBIN: ...than practically any public figure in the United States.

So how can she claim to be a reformer on earmarks?

I mean it's just...

BORGER: Well, I don't know that she's so...

TOOBIN: It's total fiction.

BORGER: I don't know that she sought more than any public figure. But, you know, what I said was she has sought, for the State of Alaska, not only Wasilla, when she was mayor, but now, currently, as...

BLITZER: I think what Jeff means...

BORGER: ...as governor.

BLITZER: ...per capita, given the population of Alaska.

BORGER: Per capita. Right.

TOOBIN: But she's claiming to be an opponent of earmarks.

I mean does truth not mean anything in these campaigns?

Can you completely change your perspective just because you say you're changing?

I mean it just is mind-boggling to me...

BLITZER: All right...

TOOBIN: ...that this campaign has suddenly become an opponent of earmarks, having chosen a champion of earmarks.

BLITZER: Steve, do you want to weigh in on that, because I have another clip I want to play of what she just said.

And go ahead, weigh in, and then we'll play the clip.

HAYES: Yes, I mean I think a lot more complicated than the way that Jeff is portraying it. I think she certainly -- when she was a new governor of Alaska and when she was mayor of Wasilla, she accepted earmarks. She didn't fight them the way that I think they've suggested thus far.

BLITZER: But she did hire a lobbyist...

(CROSSTALK)

BLITZER: She did hire a lobbyist in Washington...

BORGER: Sure.

BLITZER: ...to try to get earmarks for her community.

HAYES: Right. Absolutely. And certainly relative to the other -- to the members of the Alaska Congressional delegation, she didn't seek earmarks even close to the way that Ted Stevens sought earmarks. But I don't think she had...

BORGER: But she didn't turn them away.

HAYES: I don't think that she's been an opponent -- no. She hasn't been an opponent since the beginning.

BORGER: Yes, but she didn't turn down the money.

BLITZER: All right...

BORGER: And, you know, that's -- John McCain turns away money and refuses to propose earmarks.

BLITZER: All right. We just, by the way, heard from her speaking out on Hillary Clinton.

I'm going to play that clip in a moment.

But let's check in with Lou.

He's got a special program coming up at the top of the hour.

Give us a little preview, Lou, of what you're working on.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you very much.

And coming up at 7:00 p.m. Eastern on CNN tonight, live from the Freedom High School here in South Riding, Virginia.

(APPLAUSE)

DOBBS: We're going to be tonight -- we thought this would be an appropriate venue to focus on education, the challenges to education and the successes in education, like Freedom High School here.

We're going to be talking about that with some of the leading experts in the country.

We're going to be reporting on you on the quality of education -- public education in this country.

We'll also be reporting tonight on Hurricane Ike -- a storm like none we have ever reported on before -- at least a political storm that is trying to match the violence of this political storm, this presidential year. We'll have the very latest for you on that -- Hurricane Ike, as it now charges toward the coast of Texas and Louisiana. Our meteorologists are saying that the storm will bring certain death to people who refuse to evacuate from Galveston Island in Texas.

And the political storm today on the campaign trail -- Senator Obama launching aggressive new attack ads against Senator McCain. We'll have complete coverage. All of that as we continue our Independent convention tonight on public education here at the South Riding Freedom High School.

(APPLAUSE)

BLITZER: You've got fans over there.

All right, Lou.

We'll see you in a few moments.

We'll be watching.

Lou Dobbs is coming up right at the top of the hour.

The Republican vice presidential nominee, Sarah Palin, has just spoken out on Hillary Clinton. We have the clip for you. We're going to play it for you in a moment.

Also, Barack Obama does come out swinging today. He's answering McCain's attack ads with one of his own.

Will it be effective?

Standby.

And we're also keeping a close eye on Hurricane Ike. As the monster storm bears down on Texas, we're deploying all our resources to keep you informed.

Stay with us.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Let's get right back to the best political team.

Only moments ago, we heard this on ABC News, Gloria. Sarah Palin speaking out about Barack Obama's decision not to pick Hillary Clinton as his running mate.

(BEGIN VIDEO CLIP)

PALIN: I think he's regretting not picking her now. I do.

What determination and grit and even grace through some tough shots that were fired her way. She handled those well.

(END VIDEO CLIP)

BLITZER: All right, what do you think, Gloria?

BORGER: I think Sarah Palin's not regretting it, because I think that's the reason she's on this ticket. And I think -- look, she wants women voters. John McCain wants women voters. He's having some success in getting culturally conservative women voters to go with him because of Sarah Palin. And she's going to continue to reach out to whatever female supporters Hillary Clinton had that might be within her reach.

BLITZER: And, Jeff...

BORGER: That's what that's about.

BLITZER: And, Jeff, she also answered a question about abortion. She opposes abortion even in the case of incest and rape.

But listen to this answer she gave Charlie Gibson.

(BEGIN VIDEO CLIP)

PALIN: I am a wife. I do respect other people's opinion on this also. And I think that a culture of life is best for America. What I want to do when elected vice president with John McCain, hopefully, be able to reach out and work with those who are on the other side of this issue, because I know that we can all agree on the need for and the desire for fewer abortions in America.

(END VIDEO CLIP)

BLITZER: All right, Jeff, what do you think? TOOBIN: Well, it's a conciliatory sounding statement. But let's not -- let's be clear -- she wants to see "Roe v. Wade" overturned and she wants states to ban abortions -- not reduce them, ban them. And, you know, she can say nice things about Hillary Clinton, but Hillary Clinton certainly doesn't feel that way.

It's just a -- it's a big difference between Democrats and Republicans in this country.

BLITZER: All right, give me a clothing -- a closing that, that is, Steve.

HAYES: Well, I think it's very interesting to see how the McCain campaign is now essentially running the Hillary Clinton campaign after Wisconsin.

BORGER: Right.

HAYES: Very interesting parallels between the two candidates.

BLITZER: That's a good thought. That's probably an accurate one, because Hillary Clinton, at that time, was on the -- she had momentum going.

If she would have had a few more weeks, we don't know what the end result might have been.

All right, guys. Thanks very much. A good discussion, as usual.

Remember, we're only minutes away from Lou's Independent convention. That's coming up at the top of the hour.

Hurricane Ike coverage all night here on CNN.

Anderson Cooper is on the scene for us.

He's going to be anchoring live "A.C. 360," 10:00 p.m. Eastern later tonight.

Stay with us.

Much more of our coverage right here in THE SITUATION ROOM, after this.

(COMMERCIAL BREAK)

BLITZER: We had hoped to bring you live coverage of Senator Barack Obama's remarks. There he is in New Hampshire. We don't see him yet. He's running a little late, but that's life on the political campaign trail.

Let's take a look at some of the Hot Shots coming in from our friends over at the Associated Press -- pictures likely to be in your newspapers tomorrow.

In Galveston, Texas, a woman watches as a huge wave crashes into the seawall.

In Houston, a man cuts a piece of wood to cover his windows in preparation for Hurricane Ike's arrival.

In Austin, Texas, the Texas governor, Rick Perry, talks with workers in the state emergency operations center.

And in Surfside Beach, Texas, an evacuee with her dog shows off a message of "I love you" toward children, as she leaves her home -- some of this hour's Hot Shots -- pictures worth a thousand words.

This note, Sunday on "LATE EDITION," Governors Tim Pawlenty and Bill Richardson -- they'll be joining us. We'll be talking about the presidential campaign and a lot more. "LATE EDITION" airs at 11:00 a.m. Eastern on Sunday.

Also, we'll have all the latest on what's going on with Hurricane Ike and the aftermath.

Stay with CNN throughout the night tonight for all the latest coverage. Anderson Cooper is on the scene for us.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, a very special "LOU DOBBS TONIGHT" -- Lou?

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