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Biden Releases More Oil From Reserves In Attempt To Cut Gas Prices; UK Prime Minister Liz Truss Urges To Resign Amid Budget Chaos; Putin Declares Martial Law In Four Ukrainian Regions. Aired 2-2:30p ET

Aired October 19, 2022 - 14:00   ET

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

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VICTOR BLACKWELL, CNN ANCHOR: Hello, I'm Victor Blackwell, and welcome to CNN NEWSROOM.

ERICA HILL, CNN ANCHOR: And I'm Erica Hill.

President Biden just a short time ago, laying out his plan to keep energy prices down for Americans, which includes another push for oil companies to boost production. And it comes, that push, to lower gas prices as early voting gets underway in some states. We are now officially less than three weeks to go.

BLACKWELL: Well, who's counting?

HILL: To the midterm. That -- I mean, yes.

BLACKWELL: And now the president just announced he will release another 15 million barrels from the nation's oil stockpile beginning in December. Now, this is in addition to the 165 million barrels of crude oil that's been put under contract since this past spring. Now the reserves are at a 30-year low.

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JOE BIDEN, PRESIDENT OF THE UNITED STATES: With my announcement today, we're going to continue to stabilize markets and decrease the prices at a time when the actions of other countries have caused such volatility. And I told my team behind me here to be prepared to look further -- look for further releases in the months ahead if needed. We're calling it a ready-and-release plan. This allows us to move quickly to prevent oil price spikes and respond to international events.

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BLACKWELL: CNN's senior White House correspondent Phil Mattingly joins us live. Phil, 15 million barrels in the context of daily U.S. consumption, not a lot, tell us what this announcement means.

PHIL MATTINGLY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, just to start, Victor, it's 20 days, I've been counting. I think you guys are counting as well, until the midterm elections.

BLACKWELL: Yes.

MATTINGLY: And I think the people in the building behind me are very clearly counting and that has factored into this decision today. Look, the -- you need to view this through the prism of this is obviously a global market, right? Supply has been constrained, and the president made a reference to more than one country that has created geopolitical challenges. Obviously, the reason the initial proposal to really lay out an unprecedented $180 million -- barrels released over the course of six months was because of President Putin's invasion of Ukraine. Now you can add OPEC Plus, in particular Saudi Arabia, and their decision to drop their output targets by 2 million barrels a week and a half ago that really helped spur this on.

I think it's not just the 15 million barrels, but it's also the president declaring quite publicly that he was willing to consider more releases in the future. Those are both clear messages to the market, so is the administration's plan to try and set a floor for how they buy back to restock the strategic petroleum reserves in the years ahead. One thing to keep in mind here is whether or not this is politically based, you know, White House officials keenly aware of the correlation between gas prices, the president's approval, the Democratic Party's approval. The president was asked about it, this is what he said.

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BIDEN: It's not politically motivated at all. It's motivated to make sure that I continue to push on what I've been pushing on. And that is making sure there's enough oil that's been pumped by the companies so that we have the ability to be able to produce enough gas that we need here at home -- oil we need here at home, and at the same time, keep moving in the direction of providing for alternative energy.

(END VIDEO CLIP)

MATTINGLY: Now, guys, what the president's referencing particular in the first part of his answer is the whole genesis of this 180 million barrels over six months was designed to be a bridge for the domestic industry to ramp up their production as necessary, given the events we'd seen in Ukraine. That hasn't quite met the levels that they'd wanted it to meet -- the basic, what the president's announcing is another month extension of that.

Obviously, the oil and gas industry ramping up that production, but not very pleased with what they heard the president say directed at them about the difference between wholesale and retail prices right now. There have been words exchanged back and forth publicly and privately. That's clearly not going to end anytime soon, guys.

HILL: Definitely not. As you point out, we heard some more of that today. Phil Mattingly, appreciate it.

Joining us now is Andy Lipow. He's president of Lipow oil associates, and CNN economics and political commentator, Catherine Rampell. She's a columnist for the Washington Post.

Catherine, let's pick up where Phil left off there because the president is very clear, he spent a good portion of this event just a short time ago, talking specifically about the profits of oil companies saying it's not right that gas prices haven't fallen, calling on them to increase production to, in his words, invest in America, this push for more production, while at the same time -- I'd say doubling down but I have lost count of how many times he's done this at this point, while at the same time going after profits. Does that hurt -- the message, does that hurt his standing with these companies to get them to do that?

CATHERINE RAMPELL, CNN ECONOMICS & POLITICAL COMMENTATOR: I think what matters less is the job owning and you know berating companies for making too much money.

[14:05:04]

What matters is the incentives that these companies face. And they have actually been increasing production. They haven't been increasing production quite as much as we might like -- we, the American consumer as well as politicians might like them to do. And part of the reason why they may not have ramped up production quite as much as would be ideal to get pricing -- to get gas prices down has to do with some fear of a risk of a global downturn, right? That maybe oil prices are elevated today. But if they crash as they have in previous recessions, then a lot of energy producers will lose their shirts.

So, you know, it's risky for them to ramp up production as much as maybe consumers want them to. And that's why I think actually that essential price floor that the administration is setting on how much they -- how much the administration will pay to replenish that oil stockpile is much more meaningful than the announced release of more barrels of oil. Because it kind of provides a form of insurance to oil producers that yes, they can increase production today. They don't have to worry as much about going bankrupt in a year or two if, in fact, prices decline because there's some guaranteed minimum level of demand that they can count on.

BLACKWELL: I want to come back to that. But, Andy, I want to go to you on the 15 million barrels. For the people who are keenly watching the price of a gallon of gas, how much does this help, and for how long?

ANDY LIPOW, PRESIDENT, LIPOW OIL ASSOCIATES: Well, what we've seen in the past is every 1 million barrels a day of crude oil production increase or decrease that's equivalent to about 15 cents a gallon. But the market today, frankly, is not impressed. In fact, oil prices are up nearly 4 percent, and gasoline futures prices are up nearly 10 cents a gallon because this is just the final installment of the 180 million barrel release from the March 31 announcement and the market was looking for more, what the administration is going to do to get more oil out of the ground.

BLACKWELL: Yes. Catherine, on the point that the president was asked if this was political, he already announced 180 million barrels, 165 already contracted, he announces the final 15. Is this just putting a fresh bow on a gift that's already been opened, or is this something new?

RAMPELL: It's not entirely new. Yes, this was expected in the sense that this was part of an authorization of release from the Strategic Petroleum Reserve that was announced back in March. This is the last installment or tranche, so not that new. It's a little bit easier for the public to grasp. But then the other thing that I was talking about, which I think will probably be more meaningful, which is, you know, reducing some of the risks for oil producers. But it's easier to understand and I understand why then they're trying to give more attention to it even if there's not a whole lot. That's new here.

HILL: So given that we knew that that was coming, talking about the pricing, right, and you were talking, Catherine, about. This gives oil companies some incentive when they say -- when the administration says OK, so we're going to refill those reserves, we're going to buy your oil when it gets to between $67 and $72 a barrel. But looking at those prices today, which you were starting to touch on, Andy, last time I checked today, they were about $84 a barrel. So how long could it take for the price to get to that point where the government is going to buy from these producers?

LIPOW: Well, we -- if we look out in the future, crude oil is trading at around $70 a barrel in November of 2024. So, this is not quite encouraging for the producers to ramp up production. In fact, even before Russia invaded Ukraine, we had oil prices hitting $93 a barrel, now was a level that encouraged a new tranche of investment in the oil patch.

BLACKWELL: Andy, Conservatives are hitting the president for the reserve now at a 38-year low, correcting what I said a little earlier, of the Strategic Petroleum Reserve. Is that a national security concern? We know that the president's going to buy when it hits $70 a barrel again, but until then, is that troublesome?

LIPOW: Well, it is troublesome because the Strategic Petroleum Reserve is kind of like our rainy day fund for when bad things happen on the production side. We've been very fortunate that no major hurricane has hit the Gulf Coast production areas this year and caused a supply disruption. But we have to think about what happens going ahead if we should have an event that causes the supply disruption, such as perhaps closure in the Straits of Hormuz out of the Persian Gulf impacting oil supply.

HILL: I know we're out of time, but, Catherine, really quickly. This has a psychological impact. Realistically, when we, consumers, see any sort of impact from this announcement at the pump?

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RAMPELL: I think they're unlikely to see a big impact, to be honest.

HILL: OK.

RAMPELL: In part because as we've discussed, the actual amount that's been released from the SPR, from the stockpile is not even enough to account for a full day's consumption in the United States. HILL: All right, Catherine, and Andy, appreciate your expertise. Thank you.

In the United Kingdom, rising food and energy costs drove inflation to a 40-year high in September. The country's new prime minister is now firing back amid backlash to recent budget chaos. BLACKWELL: CNN's Bianca Nobilo joins us now. So, what's the fallout

now for Liz Truss?

BIANCA NOBILO, CNN CORRESPONDENT: It's endless, apparently. It could very easily be Liz Truss's last week as prime minister or she could continue until next week or even Christmas or beyond. That is the level of instability that we're currently witnessing in British politics.

Today was a make-or-break session for her, a prime minister's questions. This is because she'd lost a key ideological ally. Her Chancellor had essentially ripped up her economic plan and promises that she made to get herself elected. She was defeated, and really in a very fragile position. So today, she did come out fighting off the scathing attacks from the opposition.

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KEIR STRAMER, LEADER, BRITAIN'S LABOUR PARTY: I've got the list here. 45p tax cut gone, corporation tax cut gone, 20p tax cut gone, two-year energy freeze gone, tax-free shopping gone, economic credibility gone, and her supposed best friend, the former chancellor, he's gone as well. They're all gone, so why she's still here?

LIZ TRUSS, BRITISH PRIME MINISTER: Mr. Speaker, I am a fighter and not a quitter. I have acted in the national interest to make sure that we have economic stability.

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NOBILO: The whiplash in British politics at the moment is so acute. Yes, the prime minister came out and said that she was a fighter and not a quitter, but then quite soon after that appearance, she canceled a scheduled event and then didn't appear in front of the media as she was supposed to. Then the next hour, it was announced that the Home Secretary which in this country is one of the great offices of state have a very important role announced that she is resigning over a technical infringement. But then in her resignation letter in a very thinly veiled way, laid into Liz Truss and her handling of government and said that people should resign when they make mistakes. So, just more problems ahead for this prime minister, Erica.

HILL: Wow.

BLACKWELL: I'll take it a very tumultuous day for the prime minister there. Bianca Nobilo, thank you so much.

HILL: Russian President Vladimir Putin declares martial law in four illegally annexed regions in Ukraine, the implications of shifting power to the military, instead of civilian rule. We'll take a closer look at that next. And --

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REP. NANCY PELOSI, (D-CA): I hope he comes. I will punch him out. This is my moment. I've been waiting for this. For trespassing on the Capitol grounds, I want to punch him out, I'm going to go to jail, and I'm going to be happy.

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BLACKWELL: Well, hear what House Speaker Nancy Pelosi says now about those comments. That's ahead.

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BLACKWELL: Vladimir Putin declared martial law today in the four regions Russia claims to have annexed from Ukraine, Kherson, Zaporizhzhia, Donetsk, Luhansk.

HILL: Martial law means military authorities have taken over the civil government. So what does that mean? Let's get straight to CNN's Matthew Chance. He was in Moscow. Matthew, tell what the Russian president said in this declaration of martial law.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. Well, he imposed that martial law on four areas of Ukraine, which within the past month that Russia has said it's annexed. And the problem with that is, of course, Russia doesn't even have control over much of those areas. So, it's not going to make a lot of difference to the situation on the ground in many cases. Although it will mean that in the areas that Russia does control, that will be a sort of military authority or military government that takes over from the civilian authorities there.

More interestingly, I think, is the fact that Russia -- Vladimir Putin has also extended heightened security to areas of Russia proper, like the border areas bordering Ukraine, where there's now going to be travel restrictions, there's now going to be intensive vehicle checks, a much greater presence of military forces. There, of course, have been a lot of attacks from inside Ukraine into those border areas of Russia as well.

And so, it's perhaps a response to that. Moreover, across the rest of the country like Moscow, the capital city as well, governors around the country have been given authority to impose special powers and restrictions as and when they see fit. The mayor of Moscow says that's not going to have an impact on the daily rhythm of people's lives in the Russian capital, at least, but there is a concern that this martial law that's been imposed in territories in Ukraine, could be extended if necessary across the rest of the country as well. And so it's a very alarming development taking place in Russia over the past few hours.

BLACKWELL: Matthew, let's zero in on Kherson here. Russian installed leaders in Kherson. They've begun ramping up the relocation of up to 60,000 people, they call it an evacuation. What is the Kremlin saying about that?

CHANCE: Well, yes, what the Kremlin is saying that look, we're doing this to get civilians out of harm's way. Because the people in Kherson, of course, which are -- who are living under Russian control are confronting what looks like a concerted Ukrainian advance by the Ukrainian military. And so what the Russians are saying is we're simply operating to get these civilians out of the way, moving them back towards Russia so they can be safe.

[14:20:06]

Of course, there are allegations that Russia is forcibly flipping and making people leave their homes and sort of relocate inside Russia, which is, of course, illegal under international law. And the Ukrainian authorities are urging civilians in the area to stay put, saying they're not going to bomb cities, and they're looking to liberate these territories from Russian control. But there's certainly a very ferocious battle underway on the ground right now. And it looks for the most part, like the Russians, certainly in that Kherson area, a very much on the back foot.

BLACKWELL: All right, Matthew Chance for us in Moscow, thank you.

HILL: The State Department for its part is calling Russia's deepening alliances with Iran a profound threat to the U.S. and to the world. CNN has learned from two sources that Iranians are in Crimea, training Russian military on how to use drones built in Iran.

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BLACKWELL: It's believed that hundreds of these Iranian-made drones have been launched against Ukrainians in Russia's renewed assault. One source said that dozens of Iranian personnel had been sent to Crimea after Russians experienced numerous failures in testing and deploying the weapons. CNN has reached out to the Iranian mission at the United Nations for a response.

Let's talk about all this now with retired Army Major General James "Spider" Marks, a CNN military analyst. General, good to see you again. Let me start here with this declaration of martial law. These four areas, they already have Russian-installed civilian leadership, there's already a strong Russian military presence there, how much does this declaration change daily life for the Ukrainians who are living in these regions?

JAMES "SPIDER" MARKS, CNN MILITARY ANALYST: Victor, I think it changes it very little. Like we've seen the Russian forces have demonstrated what they're capable of doing on the ground. I don't think that this declaration alters any of that.

I think what really Putin is trying to do with this declaration is to create a military isolation zone. He's a limited movement within Russia along the border area. And then within these four annexed areas, or at least he's declared that they're annexed, clearly they're being contested -- quite effectively being contested, is he's creating this isolation zone where it's almost like anything goes.

Look, there are rules that govern combat. We know that. There's the moral application of force. We know that. The Russians don't abide by any of this. And so, I think this is Putin's effort.

Again, his primary audience is a domestic internal audience. And he is declaring that he's trying to make it crystal clear that this is a military operation, we want to make sure everybody can move off the streets, can have their safe -- they're safe and security zones, but the military is going to be conducting operations.

The world, the external audience, the world understands that this is nonsense. And we've been seeing this for quite some time. So, I think it's truly -- a truly an effort on his part to try to work his domestic audience.

HILL: Doesn't it also raise the question, though, of whether Putin and Russia, the forces on the ground are actually having trouble controlling those areas? If they have to go to this step, what does that really say?

MARKS: Well, they've got a new commander in charge, you know, the butcher in Syria. He's now in charge in Ukraine. He is truly a World War One butcher when you're looking at the type of warfare that he's conducted and what took place in Syria when Russian forces went into Syria to back the Assad regime. I mean, it's just complete criminality and brutality, and we're seeing that played out right now in Ukraine.

Russia realizes that its military is in a very tough spot because they've demonstrated their incredible incompetence. It's exposed to the world. And primarily, it's exposed to Xi Jinping in China who's whispering -- if not whisper and he's speaking very loudly into Putin's ear saying, look, buddy, let's get this thing over with. This is bad for business. China views the world through a business transactional filter, you're making it bad for business, get this thing over with. Let's double down. But I also think he's saying, look, don't pull a nuke out because that gets everybody involved in this mess.

BLACKWELL: What's your assessment of the up to 60,000 people who are being relocated to the Kherson region? The Russians are saying that this is an evacuation to protect these people from some Ukrainian attack. There's no indication that the Ukrainians are attacking their own people. But what do you make of the relocation and the justification?

MARKS: Yes. The relocation and -- the relocation is simply an effort on Putin's part to reduce the possibility of collaboration. That's what I view it. The methodology is whatever he wants to make of it. Again, the narrative is he's doing it for the protection of the civilians and we see this for what it really is.

[14:25:05] He wants to move these folks out of the way. He wants to continue his brutal campaign, his indiscriminate application of force. If the civilians don't get out of the way, they're going to be casualties. So there's again, not a good news story in any of this. I think it's clearly an effort to reduce the potential for collaboration.

HILL: Major General Spider Marks, always appreciate your insight. Thank you.

BLACKWELL: Former President Trump is expected to answer questions today under oath, it's part of a defamation suit brought by a woman who alleges Trump raped her in the 1990s. We've got details ahead.

HILL: Plus, after facing constant questions about his health, Pennsylvania's Democratic Senate nominee John Fetterman. His campaign just released a new letter from his doctor. We have that update.

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