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Putin Aiming to Control Donbas by Early May; Devastation around Kyiv Visible as Russians Pull Back; Official Figures 4,000+ Ukrainians Evacuated Saturday; Prominent Ukrainian Broadcaster Still Reporting from Secret Studios; Biden Approval Rating Hits New Low, Inflation Worries Loom; Uneasy Calm over Parts of Ukraine; Small Businesses Grapple with Inflation, Staff Shortages; Biden's Record Oil Reserve Release to Reduce Gas Prices; California Snowpack Critically Low, Signals Devastating Drought. Aired 9-10p ET
Aired April 02, 2022 - 21:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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WILL PACKER, OSCARS PRODUCER: And even to the point, where I said, "Rock, let them -- let them finish."
You know, let the officers finish laying out what his options were.
And they said, you know, "Would you like us to take any action?"
And he said no.
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CAMILA BERNAL, CNN CORRESPONDENT: Now Packer did say that Will Smith reached out the day after and apologized for essentially overshadowing his success. Unfortunately, many others also feel like their success was overshadowed -- Erica.
ERICA HILL, CNN ANCHOR: Camila Bernal with the latest for us, appreciate it. Thank you.
Our next hour starts right now.
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ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT: So we're in a bomb shelter in Odessa. This is where they are making bulletproof vests. IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: All of these
vehicles have been branded with the Red Cross so to try to ensure that they cannot be attacked on the road.
I interviewed a young girl, who was shot through the face, her mother says, by a Russian soldier, while trying to make their journey.
SALMA ABDELAZIZ, CNN CORRESPONDENT: You can see charities from all over the world. Everyone here really sincerely feels that this is a humanitarian crisis that they have to address.
UNIDENTIFIED FEMALE (through translator): It's so difficult. It's psychologically challenging. But when all of your life is back there in Ukraine, your soul aches.
PETRO POROSHENKO, FORMER UKRAINIAN PRESIDENT: We cannot stop them here in Ukraine. Definitely they will go further. Definitely we need more weapons.
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HILL: Thanks for joining us this hour. I'm Erica Hill in New York. Pamela Brown has the night off. You are in the CNN NEWSROOM. It's 4:00 am in Ukraine.
The country now in the 39th day of unprovoked war from Russia. There is word now that Vladimir Putin and generals are shifting military strategy. The Kremlin's new goal, seize control of Eastern Ukraine by early next month. That's according to several U.S. officials familiar with the latest intelligence.
Also today, yet another reminder that any suburban neighborhood, any city square, any civilian building or home is a target for lethal Russian firepower.
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HILL (voice-over): You hear the shots. You hear the explosions. You see the civilians are running, scattering there.
Why were they being targeted?
Well, their apparent offense was peacefully protesting Russian occupation of their town. We have another look at the attack for you from a different angle.
At least four people were reported injured. In the meantime, Ukraine's deputy defense minister says the Kyiv region has been, quote, "liberated." And these images lend some support to the claim.
Outside of Kyiv, Russian forces have apparently abandoned a strategic airport which they had captured on day one of the invasion.
(END VIDEO CLIP) HILL: In central Ukraine, a Russian general says Vladimir Putin's forces attacked military airfields and a major oil refinery. This coming one day after Russia accused Ukraine of striking a fuel depot inside Russia's borders. Ukraine will neither confirm nor deny the accusation.
In Ukraine, the country's flag once again flying over Chernobyl, the site of the nuclear disaster of 1986. Russian troops have withdrawn from the area, some of them reportedly sick from radiation exposure.
In and around the capital of Kyiv, there is a cautious welcoming of a reprieve from Russian attacks. But it's safe to say the scars of this war run very deep, as CNN's Fred Pleitgen reports from Kyiv.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, there, Erica. It's gotten a lot quieter here in the Ukrainian capital of Kyiv. We have air raid sirens a couple of times during the day.
But by and large it's certainly a lot less than we've seen the past week and even the past couple days. And the Ukrainians are essentially saying the Russians are leaving the districts around Kyiv, are retreating.
The Russians, of course, claim this was always part of their plan and they're just pulling back right now. What we're seeing now, as the Russians are moving out, is that they certainly have taken some serious losses.
You know, I was out in many some of the districts around Kyiv. And we saw a lot of tank carcasses destroyed, armored vehicles and also positions that were abandoned by the Russians as they moved out of here.
The other thing, unfortunately, we're also finding, there are still a lot of dead bodies yet to be recovered. In fact there was video that came out off of a district called Bucha, to the northwest of Kyiv, where the streets seem to be lined with corpses.
The Ukrainians now say they are obviously going to try and bring some of them away and clean that whole area up. The Ukrainians, for their part, are saying that this is definitely not the end.
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PLEITGEN: They say they believe that the Russian forces were beaten as they tried to invade the capital of Kyiv and are now essentially trying to regroup. In fact, Ukrainian officials say they believe that attacks will intensify, especially in the southeast of the country. It's certainly something that they're bracing for -- Erica.
HILL: That's for sure, Fred. Appreciate it. Thank you.
Also with us tonight, CNN military analyst, retired U.S. Air Force Col. Cedric Leighton.
Colonel, good to see you as always. The Ukraine deputy defense minister says the Kyiv region has been, quote, "liberated."
What's your sense?
Has the area been effectively liberated or is this about Russia repositioning?
COL. CEDRIC LEIGHTON (RET.), CNN MILITARY ANALYST: Let's take a quick look at Kyiv and see exactly how this has worked out. I would say liberated might be too strong a term to use. But look at this.
This is the first time that we have actually seen Ukrainian forces here and here and in this area. So basically what they're doing is, northwest of Kyiv, they've got Irpin, which Fred was at, and they have Bucha. The next thing is the Antonov airport, which they may very well have taken now, depending on which report.
And then over here in the northeast and to the east of the city, there are substantial areas of Ukrainian efforts right here, a small one up here. So what these mean basically is that the Ukrainians have taken over some of the territory that the Russians had occupied previously.
And they're pushing them back toward Belarus, up this way and Russia this way. So it's not quite a liberation but it's definitely going in the right direction from the Ukrainian point of view.
HILL: In central Ukraine, Russia struck two military airfields and a major oil refinery today, reportedly bombed from the air. We know, for weeks now, Ukraine has been asking to close the airspace. Not happening for a no-fly zone.
But when it comes to control of the airspace, does Russia have control at this point?
LEIGHTON: Not really, Erica. That's what's kind of surprising about this, the way this war has worked itself out because the Russians, it was thought, would gain complete control of the airspace, what is called air supremacy in the military jargon.
But they've not gotten that. They have air superiority to some extent, because they have far more airplanes and they fly far more sorties; in other words, flights over the Ukrainian airspace than the Ukrainians do.
But what it's telling us is that, over the airspace right here, there is still an opportunity for the Ukrainians to take out Russian aircraft and to fly their own aircraft and, in some cases, as we saw yesterday, potentially take out Russian installations on the Russian side of the border as well.
HILL: In the meantime, in terms of helping, President Zelenskyy still out there the past week, asking countries around the world for more. The U.S. sending another $300 million in new aid, including some of the Switchblade suicide drones.
What are we seeing in this package, what we know about what is being pledged here? Is this some of the more sophisticated weaponry Ukraine has been asking for?
LEIGHTON: Some of it actually; not all of it, of course. He wanted things that aren't here, like the MiG-29s, for example, the fighter jets to come from Poland. But we have is Switchblade drones, which are suicide drones. We have antidrone systems, armored vehicles, night vision equipment and ammunition.
Let me show you one of these. This is the Puma UAV. This shows you how versatile this is. A soldier can throw it like a glider. And it's very light and it can go over any territory it's directed to. It has a sensor platform and it can see the things that can be targeted.
And that means that all kinds of things that the Russians have, such as tanks, armored personnel carriers, all of those are targetable by a team, that can take a target out up to 60 kilometers or 40 miles distance.
And they have a handhold device that looks like an iPhone that they can control this with. That's the kind of thing the Ukrainians are getting, very mobile, very versatile, highly effective.
It's very similar to another drone out there, made by the same company. These drones are, again, almost handheld; this one can be launched through a tube. And it can go after any target it's directed to. So they are very versatile modern equivalents on the battlefield that can take out many of the targets threatening the Ukrainians right now.
HILL: As we look at this, there is such a massive humanitarian crisis on the ground, as you know. Some 4,200 civilians, according to Ukraine, were evacuated through humanitarian corridors today. But only a fraction from Mariupol, some 100,000 people still trapped in that city.
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HILL: Why is it so tough to establish the safe passageways at this point?
LEIGHTON: I think the main problem is that the Russians don't want to have safe passageways in this case. And that's a real problem because what you were looking for here is a safe passage out this way, from Mariupol, which is the city that's been besieged, like you wouldn't believe.
Other safe passage areas from here into this part of Ukraine, a lot of the safe passage efforts have been toward Dnipro, right in the center. These are areas that could have safe corridors from a technical standpoint; no problem to do that. But the Russians don't want them.
That's the reason, Erica, they're not happening. And they're basically threatening the entire civilian population with harm. And that is why -- it's part of their policy. And that's why these corridors are not working at this point. HILL: Yes, as we heard from Ivan Watson, one of our correspondents,
saying to me yesterday, the International Red Cross said they're running out of adjectives to describe how horrific the situation is in Mariupol. Colonel, always appreciate it. Thank you so much.
LEIGHTON: You bet, Erica. Thanks for having me.
HILL: Still to come, how do you tell your country they're under attack?
How do you report on the war when your family is also on the front lines?
Ahead, you will hear from a prominent Ukrainian journalist, who is doing just that. That's ahead.
Plus the president said he will release an unprecedented amount of oil from the United States strategic reserves.
Will that do anything to help ease the sky-high gas prices we're dealing with right now?
Stay with us.
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HILL: Russia's invasion, understandably, changed life for everyone in that country. CNN's Don Lemon spoke with a Ukrainian broadcaster, who was the first to announce the war had begun and learned how she is still staying on the air.
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DON LEMON, CNN ANCHOR: How are you?
I never know what's the right answer to this question, considering who is asking me about this.
LEMON: Yes.
MARICHKA PADALKO, TSN ANCHOR: I mean if people from Ukraine ask me how am I, I would say because I'm fine because I'm alive, my kids are OK and my husband is alive. But if somebody from the outside is asking me, I still -- I think the comprehension of what is going on will come later because it still feels, even to me, so unreal.
LEMON: I'm sure you could feel the pulse the nation.
You could feel -- what was that like? PADALKO: For me it was very emotional, because I tried being a news anchor. At the beginning of the start of the war for me meant that my husband was leaving for the army.
(Speaking foreign language).
We understood that this war will be in every family in this way, in one way or another way. And that morning, we knew that some of the TV anchors were not able to be at the TV station just because they had to take care of their kids, to take them to safety.
And actually, that the biggest discussion I think that I had with my husband, maybe months before invasion, because he was very -- he was being very responsible about this war.
And he said, you have to make me a promise that, on the day of the invasion or whenever it starts, you will just put your kids in the car and take them to safety and I go to the army.
And I said, "What about my job?"
I have a mission to go to the TV station. And I don't think it's less important than your mission to go to the army.
So President Volodymyr Zelenskyy --
LEMON: As you're on the air then, you knew your husband was going to have to go away.
Did he go away immediately?
PADALKO: Actually when I was done with my first broadcast on that day, I rushed back home, because he was already back from Western Ukraine, where he took the kids. And he had only 15 minutes to get back his backpack, to put on his uniform and to go and be at the designated place.
LEMON: And what was that like?
PADALKO: For me, it was heartbreaking, because I didn't know whether -- to tell you the truth, I don't know whether I was going to see him again because the guys go the war.
What can you expect?
LEMON: How did you decide who goes on the air when?
Because I notice, when I'm here, I'm flipping through channel after channel after channel; it has a different name on the screen.
PADALKO: Yes.
LEMON: But it's the same --
PADALKO: Same picture.
LEMON: -- same picture, same people on.
PADALKO: Yes. Now it's divided very proportionally amongst all TV channels, who are in this united news (ph). One day we have a night shift. The next day we have morning shift, then we have day shift. Then we have this evening shift. And then we repeat.
So it's all equally just divided between channels. But we're also, all the time, in this reserve studio. So anytime somebody cannot be on the air, cannot broadcast for whatever reasons, they feel bad, I mean, they're sick or whatever happens with their technical facilities or they have to go to the bomb shelter, we fill in.
LEMON: There is a backup.
PADALKO: Yes.
LEMON: But I notice it's -- I think it's just one camera, straight to camera. There is no different --
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PADALKO: Yes.
LEMON: -- it's not fancy.
PADALKO: Yes, because it's --
LEMON: There is no bells and whistles.
PADALKO: Yes, it's wartime.
LEMON: Is there any understanding for you, as a media person, that the Russian people are being brainwashed, that they're not seeing free press and that's why they're, in part, doing what they're doing?
Large part, really, because they're not getting the right information.
PADALKO: You know what, I have a very personal story about this, because my husband was born and raised in Russia. My -- his parents are in Russia. And they've been to Ukraine many times. They've seen us. They've seen people. They know what is going on.
But still, at this point, they are brainwashed by Russian news. And they think that we deserved it.
LEMON: So you don't think you'll have a relationship with your in- laws?
PADALKO: Not very close relationships. We had some actually break after Crimea was annexed.
LEMON: You had a break.
PADALKO: We had a five-year break.
[21:20:00] LEMON: You didn't talk to them?
PADALKO: No.
LEMON: Did he talk to them?
PADALKO: Sometimes, because they are their parents, just talking how -- just saying how the kids are.
LEMON: Has he spoken to them?
PADALKO: He asked his mom not to text him because he said it's very hypocritical of her to be asking how he is or showing some care for him, when our children are being bombarded by Russian missiles.
LEMON: Do they believe him?
PADALKO: I don't think so because they never wrote back.
LEMON: That's tough.
PADALKO: But, you know, having a job now, unlike many people in Ukraine, that's what keeps me distracted of all my worries that I have because that's the only time I don't think where my husband is or whether he is alive now or something happened.
LEMON: It's a nice distraction.
PADALKO: Yes.
LEMON: You said you had a mission -- is that mission to inform people and not have them be like Russians?
PADALKO: This is the first mission that you said, that inform people and not to be -- to be real news and not propaganda. But now I have a special -- I see a special mission for myself.
As I was the person to announce the that the war had started, I have to announce that it has ended. So I'm waiting for this mission to happen in my life. Hopefully, it will -- I will see that moment this year.
LEMON: What will you say?
PADALKO: I don't think that I will -- I will have words at that point. And maybe I'll start saying something about Ukraine and will be pushing my partner to pick me up and we will be crying, because I think, at that time, I will have an excuse for tears.
(END VIDEOTAPE)
HILL: Thanks to Don for that piece.
Another tragic loss for the journalism community, a Ukrainian photojournalist, who has worked with outlets, including Reuters, Maksym Levin was killed by Russian forces in Ukraine. He provided a number of compelling, honest images of the war.
He has been a contributor for Reuters since 2013. Maksym was found unarmed, two gunshot wounds, according to the Ukraine attorney general's office. He was, as he describes himself online, a photographer, videographer, father and human being.
He will be greatly missed and remembered by friends as a tenacious reporter, who had no fear.
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HILL: It's 219 days until the midterms. I know you're probably counting, too, but I wanted to make sure we have the same number there.
This is, though, in all seriousness, a lot of warning signs tonight for Democrats. President Biden's approval rating continues to trend the wrong way, down. This despite the historic Supreme Court nomination and a major crisis as we look at what's happening overseas, two events that at other times might bring a bump in support.
Democratic voters appear increasingly apathetic. Two-thirds of Republicans report high enthusiasm for the midterms. Look at this, just half of Democrats.
So how concerned should Democrats be at this point?
Joining me now CNN senior political analyst Ron Brownstein.
Ron, always good to see you. You have also, with the stellar jobs report yesterday. And yet that jobs report came on the heels of three different polls that found approval for the president's handling of the economy was at a third.
So two-thirds of Americans say they don't like what he is doing with the economy, even if it's strong. That's really tough to surmount.
How loudly should the alarm bells be ringing?
RON BROWNSTEIN, CNN SR. POLITICAL ANALYST: Very loudly. Look, the disapproval on the economy really, Erica, is not hard to explain, as you might expect. We have not had a lot of moments in American history, where we have had sustained high inflation.
But when we have, it tends to eclipse everything else. It's really a giant cloud in front of the sun, blotting out all of the other good news in the economy. It's something that Americans feel every day, sometimes multiple times a day.
And it's very hard to see the president's approval rating recovering in any significant way, particularly while gas prices are this high.
You know, I talked to a number of leading economic forecasters a few weeks ago, who say that, originally, they thought inflation might moderate significantly by the fall, allow Democrats to avoid the worst.
But with the Ukraine war and the impact on gas prices, they are expecting a much -- they still expect some moderation but much smaller moderation. And that's a dangerous trajectory for Democrats in Congress.
HILL: You know, there have been some attempts by the administration to really pin, not just gas prices but even some of the other hikes we see, on Putin. And that came up yesterday. I was talking with Labor Secretary Marty Walsh on the heels of the jobs report.
I pushed back on that, reminding him the inflation was here before Putin invaded Russia. Here is his take on why we are where we are in terms of inflation and what could be ahead. Take a listen.
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MARTY WALSH, U.S. SECRETARY OF LABOR: When you think about our economy, our economy really is a global economy at this point. So what happens in one part of the world will impact other parts of the world.
The variants over in China, we're seeing China shut down many cities because of rise in new variants over there. In parts of the Europe, we have to keep very close eyes on that as well, because that will indirectly impact our supply chain, which ultimately will -- can potentially drive costs up.
So you know, a lot of this -- some of this in is not within our control.
(END VIDEO CLIP)
HILL: It's not new for Democrats to have a messaging problem, Ron. Let's be honest. They often have a hard time getting on the same page.
But for something like this, heading into the midterms, do you see a message out of this?
BROWNSTEIN: No, there is not -- there is not a message solution to a tangible problem in people's lives, that the high costs of -- you know, a number of things now represent. As I said, there are serious, prominent economic forecasters, who thought that this was going to get better this year; not eliminate but get better.
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BROWNSTEIN: They now have kind of scaled back their expectations because of the disruptions of particularly the war in Ukraine but also, as the secretary mentioned, the potential supply chain disruptions from China's COVID resurgence. So this is going to be a difficult circumstance. The midterm
elections, you know, it's a truism in politics; people say that elections are about the future. Presidential elections are about the future. Midterm elections tend to be about the present, they tend to be voters taking a snapshot of where things are at this moment.
And when they are unhappy, they take it out on the party in power. It's worth noting that the last four times a president went into a midterm with unified control of government, which is what Democrats have now, they've lost it.
So there is a very strong, modern tradition of voters punishing the party in power halfway through the president's first term in particular.
And Democrats right now, you know, their best hope is trying to shift the focus more toward Republicans, toward Trump in particular, because that snapshot is highly unlikely to produce a kind of a positive verdict between now and November.
HILL: But wait, quickly let me push on that, pushing the focus toward Trump, right, we saw how that did not work recently.
BROWNSTEIN: Right.
HILL: Is that the really smartest option for Democrats, to look backwards?
BROWNSTEIN: No, no, putting the focus toward Republicans, including Trump.
HILL: OK.
BROWNSTEIN: What you always hear from the party in power, when people are dissatisfied, is that they are going to make the election a choice, not a referendum. That's really hard to do in a midterm. Midterms -- in a presidential year, absolutely; it can be a choice.
And in midterms, it tends to be a referendum on the party in power. As I said, the last four times one party has had unified control of government going into the midterm, voters have revoked it, a pattern going back to 1994.
So it's hard to do. But when three-quarters of Americans are saying the country is on the wrong track, which is roughly the number we have now, that is a referendum Democrats are not going to win.
So the best chance is to try to focus more voters on whether they support what a likely Republican -- what Republican control of Congress is likely to mean. And one of the things -- one of the items in that argument certainly is going to be weather a Republican House or Senate or both would make it easier for Trump to try to steal the 2024 election.
That may be the best chance Democrats have to excite their voters, who, as you noted, in the traditional midterm pattern, the party in power, their voters, going back really over 100 years, have shown less interest in the midterm than the other side.
It's a pattern we see repeated now. Democrats needed to find a way to solve that or at least ameliorate it and probably their best chance is to try to focused on what Republican governance would mean for their key constituencies.
HILL: Ron Brownstein, always good to talk with you. Thank you.
BROWNSTEIN: Thank you.
HILL: Up next, as Ukrainian officials says the Kyiv region is liberated from Russian forces, our Christiane Amanpour speaks with some of the fighters, who show her some of the Russian vehicles they managed to destroy.
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CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice- over): "They didn't see us. They didn't know we were here so they just started to work on houses. So I took the tank in my sights and I fired a rocket and goodbye to him."
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HILL: The Ukrainian soldiers who have successfully defended Kyiv say their stronger morale and spirit give them an advantage over the Russians. Life in the capital, though, isn't exactly easy. People there facing acute shortages, CNN's Christiane Amanpour has more.
(BEGIN VIDEOTAPE)
AMANPOUR (voice-over): The first thing you notice approaching the front northeast of Kyiv are the lines of villagers, waiting for humanitarian handouts. They receive a bag of bread and basics to get them through these difficult days.
"The first week of the war, a shell hit us near the greenhouse. We barely survived," says this woman.
"We had help from strangers around us. They gave us bread and canned food. We wouldn't have managed otherwise."
No one here knows when this war will end or whether Russia still has designs on Kyiv. The front line is about a mile away. For now, an uneasy calm prevails, ever since the Ukrainian defenders stopped the Russian advance here. It was February 28th, they say, day four of the war. They want to show us how they did it. But first we have to clamber
over the bridge they downed to see the armored column they managed to take out. The riverbank is littered with their skeletons.
This was a turkey shoot; Russian armored vehicles and tanks had come off the road to avoid the anti-tank mines, only to find themselves unable to cross the bridge and unable to reverse in time. Ukrainian forces tell us, none of the soldiers inside survived.
A little further up the road, two tanks have been virtually smelted, blasted almost to smithereens. Forty-year-old Yevgeny (ph), a veteran fighter, proudly tells us this was his handiwork.
"We all here have one role, to keep the enemy off our land," he says.
"First thing they did after seeing the village, they started to shell houses, just like that. They didn't see us. They didn't know we were here. So they just started to work on houses.
"So I took the tank in my sights and I fired a rocket and goodbye to him."
The destroyed vehicles are stamped with an O. The Ukrainian officers here tell us this identifies them as Russian units that entered from Belarus to the north.
Oleg (ph) is the officer who commanded this operation.
"As for now, looking at previous fighting we've had, I can tell you that we are trained better," he tells me.
"We have stronger morale and spirit, because we're at home. They are afraid. But they go because they're made to."
He's been battle hardened ever since the first Russian invasion from 2014, saying his side has enough weapons, ammunition and determination to win.
"I can tell you, I'm almost sure the Russians are regrouping and not retreating," he says.
"Besides, we are preparing ourselves to go forward. We're not preparing just to defend here."
[21:40:00]
AMANPOUR (voice-over): U.S. and British intelligence say Putin seems to have, quote, "massively misjudged this situation," and clearly overestimated the abilities of his military to secure a rapid victory.
This old lady tells us, "I have seen one war and here we go again. I wish Putin would go away."
The people of this land remain stalwart and the soldiers remain dug in, hoping they can continue to withstand whatever Putin has in store for them next -- Christiane Amanpour, CNN, east of Kyiv. (END VIDEOTAPE)
HILL: For information on how you can help, head on to cnn.com/impact. CNN audiences have already donated more than $7 million.
Still to come this hour, the impact of inflation: you'll meet a small business owner who is struggling to sleep at night because of the rise in prices.
(BEGIN VIDEO CLIP)
HENRY ADELEYE, CO-OWNER, KUPCAKERIE: Last year we actually had our busiest year ever and our lowest profit margin ever as well.
NADIA ROMERO, CNN CORRESPONDENT: How does that happen?
H. ADELEYE: Just everything is going up.
(END VIDEO CLIP)
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HILL: When is a cupcake much more than a cupcake?
[21:45:00]
HILL: When it's from a small business, struggling to weather inflation, rising fuel costs and a job market that, frankly, has a lot more openings than available workers. That cupcake now a symbol of the struggles nationwide, as CNN's Nadia Romero reports.
(BEGIN VIDEOTAPE)
ROMERO (voice-over): Every step of the baking process now costs more.
KASCHA ADELEYE, CO-OWNER, KUPCAKERIE: When you look at your cost of goods sold and you're like, whoa.
ROMERO (voice-over): Almost eight years ago, Kascha and Henry Adeleye started Kupcakerie in East Point, Georgia, their baking business almost a bust during pandemic shutdowns.
K. ADELEYE: So that first two weeks was probably the scariest time of my life, period, because we just did not know.
ROMERO (voice-over): But Kupcakerie has kept backing and surviving. The president touting booming job growth nationwide, wages up, unemployment down. Georgia Commissioner of Labor Mark Butler says the state is an example of record-breaking bounceback.
MARK BUTLER, GEORGIA COMMISSIONER OF LABOR: Right now look at Georgia, we have been breaking records in a lot of different sectors, like we were talking about professional services, health care, warehouse and transportation. So we're doing really good all the way around.
ROMERO (voice-over): But inflation plagues the economy. Deliveries carried Kupcakerie through COVID. But now skyrocketing gas prices sour the sweet treats.
K. ADELEYE: Gas prices are ridiculous. So we had to increase our delivery costs for the first time ever.
ROMERO (voice-over): And baking staples ...
K. ADELEYE: Doubled, the costs for each cupcake at this point.
ROMERO (voice-over): In 2019, Kupcakerie would pay about $18 for 15 dozen eggs. Now --
H. ADELEYE: They are $55 for 15 dozen.
ROMERO (voice-over): Cream cheese, about $6 per three-pound loaf; now --
H. ADELEYE: $11 for a loaf, so almost double the price of that.
ROMERO (voice-over): Their bottom line just didn't add up.
H. ADELEYE: Last year we actually had our busiest year ever and our lowest profit margin ever as well.
ROMERO: How does that happen?
H. ADELEYE: Just everything is going up, like tenfold.
UNIDENTIFIED FEMALE: That will be $39.81.
ROMERO (voice-over): So the first time, Kupcakerie's cupcakes now cost 5 percent to 10 percent more.
K. ADELEYE: You want a cupcake, we have to -- we've got to charge the cost to make them.
Banana pudding, red velvet.
ROMERO (voice-over): Customers take note.
TONIE BUDGET-PRICE, KUPCAKERIE CUSTOMER: I did frequent another bakery, where their cakes are -- they're nice. But their prices are excessive. So, again, another reason for me to come and have the opportunity to try something different at a cost that I feel is inviting.
ROMERO (voice-over): A recent U.S. Chamber of Commerce survey shows most small business owners have raised their prices due to inflation while also making big changes to attract a strong workforce.
BUTLER: I still think we're a ways off to figuring out what the landscape will look like because there's been so many resets when it comes to the cost of goods, the cost of doing business and wages.
ROMERO (voice-over): With baby number two on the way, the Adeleyes fight to open a second Kupcakerie location, despite their challenges.
H. ADELEYE: Sometimes you can't sleep at night when you see the numbers. But we're a business and we know we have to stay in business.
(END VIDEOTAPE)
ROMERO: Georgia Commissioner of Labor Mark butler says, when inflation is driven by increases in wages, that's not something you can easily roll back. But he says answering the question of how do you stop inflation is harder now than it's ever been -- Erica.
HILL: That's for sure, Nadia, appreciate it. Thank you.
As Russia's war on Ukraine rattles oil markets around the world, President Biden is planning to tap into the U.S. Strategic Petroleum Reserve in an effort to help combat high gas prices, authorizing the release of 1 million barrels of oil a day for the next six months.
Earlier I spoke with Bob McNally, president of Rapidan Energy, to ask if this will actually ease the burden on Americans at the pump.
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BOB MCNALLY, PRESIDENT, RAPIDAN ENERGY: Unfortunately, probably not in a good way. Oil prices are probably headed higher, because, while the U.S. consumes about 20 million barrels a day, the right way to think about the United States adding 1 million barrels a day from strategic stocks is to compare it to the amount of oil that we could lose from Russia due to Putin's invasion of Ukraine.
Russia is the world's largest oil exporter at almost 8 million barrels a day. Some 3 million barrels a day is directly threatened by sanctioning or self-sanctioning. So the problem the president has -- and we all have, because crude oil prices in the world is what determines our local gasoline price -- is that 1 million barrels a day isn't enough to address the Russia problem.
So, unfortunately, as long as Russia poses a problem to the global oil market, a disruption risk, that gasoline prices are probably headed higher.
HILL: So they're probably headed higher. But again, put this in perspective for us. The U.S. is not Europe, which relies on Russia for what some 40 percent, right, of oil and gas and its energy.
[21:50:00]
HILL: The U.S. does not rely on Russia like that.
Remind us again, why is it so important what's happening with Russian oil if we're not using it in the U.S.?
MCNALLY: Right, well, the hard truth about the oil market is that, even if you are like the United States, blessed to be self-sufficient in oil, we are a net exporter of oil. But it doesn't matter because a supply disruption anywhere leads to a price increase everywhere, including here.
All consumers, whether you are Saudi Arabia, Canada, the United States, an importing country, China, it doesn't matter. We all pay the same price and that's determined in the global crude oil market pool.
HILL: So when we look at that price, right, so releasing these barrels of oil every day for the six months may not have a big impact at the pump -- may have a psychological impact, even perhaps on the markets, eventually we're going to need to replenish that back into the strategic reserves.
Typically that's done, from what I understand, when oil is pretty cheap.
Do we have to worry about now replacing these barrels, these 180 million barrels, at today's prices?
MCNALLY: Well, I don't think the administration will replace at these prices or higher, most likely. They will wait until oil prices go lower, say $80 a barrel or $70 a barrel is what I believe they are thinking about, if we see those prices again anytime soon.
But you know, if we don't refill the reserves, we're in trouble because there are all kinds of other disruptions in the world, Houthis are attacking Saudi facilities, Libya is unstable. If we don't replenish that emergency reserve in the coming years, we'll be even more vulnerable to price spikes when, as they always do, these geopolitical disruptions occur.
So one way or the other, filling the SPR is going to be a challenge.
HILL: We're talking about 180 million barrels. There will still be more than 400 million barrels, correct me if the math is wrong there, in the strategic reserve, which are also there for things happening in the United States, so natural disaster, other issues here.
Are we OK for the time being?
MCNALLY: You know, not really. The -- unfortunately, Congress -- and this has been a bipartisan problem, Erica, this is Democrats and Republicans -- have been very, very irresponsible with the Strategic Petroleum Reserve.
It's been sold down since 2008, when we had it over 700 million barrels to 568 million now, down 21 percent. And that's to pay for non-emergency expenses. And in addition to the 180 million barrels, there are more barrels being sold, again just to pay for regular expenses.
So I think -- I think they're going to see a need to have to replenish this, because the world is still dangerous and consumers are still vulnerable to these price spikes. HILL: One other question, we talk so much right now, understandably,
about the price of oil; it's been seesawing around $100. It's up, down, depending on what's happening in Washington, overseas.
Should we be, as consumers, should we be looking at this every day?
Or is this more like your 401(k), where you're told, don't look at this every day. It's going to continue to change and a lot of it is out of your control.
MCNALLY: Yes, you know, I think you should look at sort of averages. The volatility now is even making professional traders dizzy and fall down. It's crazy, the volatility we see in the oil market. So I wouldn't worry about that as a consumer.
I would just look at the general trend, the general trend, the averages over recent weeks. And that is headed higher, unfortunately. And I think it will continue to do so, as long as Russia poses one of the biggest disruption risks in modern times to the global oil market. So look at those averages.
HILL: Bob McNally, great to have you with us. Thank you.
(END VIDEOTAPE)
HILL: Just a little more perspective for you here. Let's look at AAA. It put out today's national averages. This is for a gallon of regular unleaded. Today it's $4.20. Last month it was $3.66. Last year, maybe you don't want to look at that. I'm not even going to say it out loud. It's too painful.
Up next here, a chilling, chilling warning from scientists in California. Why a lack of snow means the state's drought could get much, much worse.
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UNIDENTIFIED MALE: I should be standing on roughly five feet of snow. So my feet should be roughly right here.
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[21:55:00]
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HILL: The country's most populous state is experiencing its driest year in nearly a century. New evidence shows the devastating dry spell in California may actually be worsening. CNN's Stephanie Elam is near Lake Tahoe.
(BEGIN VIDEOTAPE) STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): The beautiful Sierra Nevada Mountains, a winter wonderland where people come to enjoy the snow.
But this is taking the fun out of it.
In California's last snowpack survey of the wet season, just two.5 inches of snow were measured, containing the equivalent of only one inch of water.
That's a mere 4 percent of the April 1st average.
Most of the seven readings here were on dirt and grass.
SEAN DE GUZMAN, CALIFORNIA DEPARTMENT OF WATER RESOURCES: As of April 1st, where we should be in terms of our snowpack, we should be standing on roughly five feet of snow. My feet should roughly be here.
ELAM: Think of the snowpack as a frozen reservoir. The state says it's responsible for about 30 percent of California's water, including drinking water.
(on camera): It's a beautiful day out here but that's part of the problem. These rushing waters are because the snowpack is already melting but not all this water is going to make it to California's reservoirs, which are already low.
GUZMAN: We could be losing it down into the ground water, down into the soil. So that would also help replenish the ground water. But at the same time, we could lose some through evaporation.
ELAM (voice-over): Winter in California started off wet. But hopes of a drought-busting rainy season quickly dried up.
By March, the state had notched the driest first three months of the year in recorded history.
WADE CROWFOOT, CALIFORNIA SECRETARY FOR NATIONAL RESOURCES: Some would consider this a wake-up call. I disagree. The alarm has already gone off. Climate change has been across the American west.
ELAM: According to the U.S. Drought Monitor, more of northern California sank into extreme drought. So did parts of Utah and New Mexico. Even worse, parts of Oregon and Nevada are in exceptional drought.
GOV. GAVIN NEWSOM (D-CA): We are encouraging people to do commonsense things.
ELAM: Last summer, California Governor Gavin Newsom called on residents to cut their water consumption.
