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Oil Embargo Could Be Part Of Next EU Sanctions On Russia; Nearly 80 Million Americans Facing Severe Weather Threat; Biden To Announce Emergency Waiver On Summer Ethanol Ban. Aired 5:30-6a ET
Aired April 12, 2022 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: All right, welcome back.
European ministers are meeting now where, among other things, they are discussing the war in Ukraine and how to reduce Europe's reliance on Russian energy.
I want to go live to CNN's Nic Robertson. And Nic, the Ukrainian president this morning saying he wants the EU to sanction all Russian banks and Russian oil, and to set a deadline for ending imports of Russian gas. What are European leaders saying?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yesterday was the foreign ministers' meeting and there was talk on the way in about sanctioning Russia's oil sector.
Today, it's the Europe ministers, as they're called here. They're talking about a number of different things today, so Ukraine is not front and center on the list. They're talking about the rule of law. They've got some sort of housekeeping to do there if you will on Hungary.
But on the issue of the Russian energy supplies that are coming to Europe, the European Union's foreign policy chief Josep Borrell, yesterday, said very clearly that oil and gas are on the table. Nothing is off the table, he said. But he also said look, we've got to look at this. It's an asymmetrical problem for the European Union because not all nations consume Russian oil and Russian gas at the same rate.
For example, just last week -- a few days ago, we heard from Lithuania saying that's it -- we've cut off our Russian gas supplies. But actually, Lithuania is one of the biggest recipients of Russian oil. Poland is as well. So you have these sort of complications.
Borrell also pointed out that look, of the oil and gas that comes from Russia, oil is the biggest thing. It's four times as much oil comes into Europe from Russia as does gas -- 80 billion metric -- cubic meters of oil compared to 20 billion cubic meters of gas.
So it does seem that they're targeting the sort of bigger-ticket item there -- the oil. But as for a deadline when they're going to do this, I don't think anyone's expecting it ahead of the Easter weekend coming up.
ROMANS: It's just not as simple as turning off the spigot, right? And the point of sanctions or even some sort of embargo is that you've got to make sure you don't crash your own economy trying to punish Putin and Putin's economy. Just -- it's a -- it's a very fine line to walk and fascinating to watch how they're trying to navigate that.
Thank you so much, Nic. Nice to see you.
In just about three hours, a critical inflation report -- the government's Consumer Price Index comes out. Analysts expect it won't be pretty in line with the February CPI, which was the highest in 40 years.
You know, after decades of prices barely budging with the pandemic, the powerful recovery in the U.S. economy that's followed here in the U.S., and now Putin's war, prices are climbing dramatically. And even though the job market and the economy overall are strong, polls show inflation is sapping consumer sentiment. Nearly two-thirds of Americans say the economy is bad. And of those, most say the problem is inflation.
It's important to remember, though, the pain not spread evenly. Fed governor Lael Brainard, last week, said inflation is a particular burden on lower-income households. She pointed out this statistic, which I think is fascinating. She said lower-income households spent 77% of their income on necessities. Higher-income households spent only 31% on the basics.
I want to bring in CNN global economic analyst Rana Foroohar, columnist and associate editor at the Financial Times, and author of the book "Don't Be Evil." Rana, so nice to see you this morning.
American household finances in way better shape today than they were after the Great Recession more than a decade ago, but this inflation ugliness is really the only story right now in the American economy, isn't it?
RANA FOROOHAR, CNN GLOBAL AFFAIRS ANALYST, GLOBAL BUSINESS COLUMNIST AND ASSOCIATE EDITOR, FINANCIAL TIMES, AUTHOR, "DON'T BE EVIL: THE CASE AGAINST BIG TECH": One hundred percent. And, you know, you're starting to see some anecdotal evidence Christine of households cutting back on non-essential spending. Cars -- even used cars are not selling the way they were. You're starting to see a little bit of wobbling in housing markets in certain areas.
And this isn't just in the U.S. -- of course, around the world. Some countries are rationing electricity. People are really having to marshal all their resources to pay for food and fuel.
Now, I'm concerned about what that's going to do to the economy as a whole and to companies. You're seeing companies like Apple actually cutting back production of certain kinds of models of iPhones. If you start to see companies wobbling and then you get a market correction on top of that, the dominos could start to fall in a way that historically doesn't look good.
ROMANS: You know, we already had the pandemic and the tangled supply chains and a roaring economy on the way -- on the way out, and then now, you've got Putin's war here.
The Treasury Sec. Janet Yellen sharing --
ROMANS: -- sharing some concerns about just the enormous disruption because of that war and she warned of a crisis in global food supplies.
You know, the winter wheat is already in -- is in the fields in Ukraine. Russia and Ukraine account for 30% of global wheat supplies. And you've got spring planting that could be happening right around the corner here. This is really concerning.
FOROOHAR: Oh, 100%. And Christine, we've talked about this before. The last time there was a bad harvest in Ukraine -- and that wasn't anything like what we're seeing now, which is basically no harvest -- you got the Arab Spring. Because a lot of countries get most of their wheat supply from the Ukraine. It's really the breadbasket -- one of the breadbaskets of the world.
But there's an effect even into American farming. I'm hearing farmers in Kansas say commodity prices are so high right now we can't afford as much fertilizer, so we're not going to maybe get the harvest here that we might have.
So again, all kinds of domino effects. When you start to see food and fuel prices rise, that's when you get food riots. That's when you get political instability around the world. So it's bad for economics but this is the kind of thing that can reshape geopolitics, actually.
ROMANS: Yes. Food and fuel shortages -- I mean, history is -- the book of history is written with what happens when that is a problem.
OK, so Europe preparing the sixth round of sanctions against Russia. The trick here, as I was just talking with Nic Robertson and I know you were listening, is to punish Putin's aggression but not throw your own economy into some kind of a deep recession.
How are we doing on the -- on the sanctions, and are they biting yet? Are they biting Russia yet?
FOROOHAR: Well, yes, in the sense that the Russian economy is a complete mess but that is not stopping this war. And you're dealing, frankly, here with an autocrat that really doesn't care how much pain his own country is going to be in.
[05:40:05] You're also seeing a Russia that is being pulled more into China's orbit. You know, ultimately, China will pick up a lot of the commodities from Russia that are not into the European and Western markets now.
I think we're going to have to see Europe really take a very firm stand. And I think if you saw a complete European boycott of Russian energy you might start to see a change. That would be very, very painful, although possible. And I wonder if we're not going to get there before this war is over.
ROMANS: I think that's a really good point about the -- you know, the China orbit here. You've been seeing some of the -- you know, the Russian propaganda and disinformation being reflected in some of the state media in China. So it's interesting how that's been playing out. And again, we could be in the early days here. It's unclear --
ROMANS: -- what happens next.
Rana, so nice to see you, CNN global economic analyst.
FOROOHAR: You, too.
ROMANS: Thank you.
All right. President Biden about to announce new rules to help drivers combat high gas prices. And, severe weather in the American south with the worst of it yet to come.
ROMANS: All right. Nearly 80 million Americans facing a severe weather threat today. Major cities like Dallas, Oklahoma City, Kansas City, Omaha could see damaging hail and possible tornadoes.
I want to get right to meteorologist Pedram Javaheri for the latest. You know, these reports of big hail and damaging hail are just kind of crazy.
PEDRAM JAVAHERI, AMS METEOROLOGIST: It is remarkable. It really speaks to the severity of the storms, Christine. And when you take a look at these storms and what's in store the next 24 to 48 hours, this is sort of the pattern we've seen the last four weeks. Every single week we'd see a multi-day severe weather outbreak.
In the past 24 hours, just six reports of tornadoes and six reports of damaging wind, but the vast majority have been related to large hail. And some of these hailstones not just golf ball-sized but up to baseball-sized hail in diameter across Mayflower, Arkansas. That was at 2.75 inches.
Significant damage in place near Little Rock, just north of it. A tornado there canceling classes across Central Arkansas university there.
So, an incredible setup to produce the active weather that we expect here. And not just, again, into Tuesday -- potentially into Wednesday and Thursday as well. And the storm is in line here for Tuesday afternoon and Tuesday night.
The most severe of the storms really looks to pop up sometime late into the afternoon and evening hours, and maybe even into the overnight hours in the northern half of it near Des Moines and near Kansas City. Those are the areas of concern indicated in orange. That's a level three on a scale of one to five.
Some of these regions have the potential here, especially the hashed (ph) area off toward the north, including around Des Moines where a 10% chance of tornadoes is a significant threat within 25 miles of a point where tornadoes of EF-2 or greater are possible in that area. And again, that could happen into the evening hours where it makes it that much more dangerous.
Now, notice the threat expands a little farther towards the east on Wednesday. One hundred million Americans at risk here going into Wednesday afternoon's storm. Potentially, a more significant setup here when it comes to large hail, straight-line winds, and once again, a few strong tornadoes, EF-2 or greater within this region.
So this is an area we're going to follow very carefully --
JAVAHERI: -- the next couple of days.
ROMANS: And the president is headed to Iowa today, landing in Des Moines -- headed to Menlo, Iowa. So we'll see -- weather may -- what it means for his plans.
Thank you so much. Nice to see you.
JAVAHERI: Thank you. Thank you.
ROMANS: All right. The WBNA commissioner says the league is doing all it can to bring home Brittney Griner who remains imprisoned, of course, in a Russian jail.
Andy Scholes has more in this morning's Bleacher Report. What do we know, Andy?
ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Good morning, Christine.
So, Brittney Griner has been in custody in Russia since February when she was arrested on drug charges by Russian authorities at a Moscow airport.
Now, before last night's WBNA draft, Commissioner Cathy Engelbert said they're working to gain her release but it's certainly a slow process.
(BEGIN VIDEO CLIP) CATHY ENGELBERT, WNBA COMMISSIONER: And obviously, we're getting a ton of support from the government, from specialists, from -- and her representation are able to visit with Brittney. We know she's safe but we want to get her home.
So it's just a very complex situation right now and we're following the advice. There's not a day that goes by that we're not talking to someone who has views on what we've been doing and how we're moving forward. I know we're all frustrated but we do need to be patient.
(END VIDEO CLIP)
SCHOLES: ESPN reports Griner has been able to see her legal representative in Russia twice a week and is allowed to receive letters.
Griner was the number one pick in the 2013 WNBA draft and one of the league's all-time best players.
The league, meanwhile, holding its annual draft last night. The Atlanta Dream had the top pick and they selected Kentucky's Ryhne Howard who was the SEC Player of the Year as a sophomore and as a junior.
All right, in the NBA, meanwhile, the Lakers officially parting ways with head coach Frank Vogel. His firing comes just 18 months after leading the Lakers to an NBA title. This season certainly a nightmare for the Lakers. They didn't even make it to the Play-In tournament.
And that Play-In tournament begins tonight on our sister network TNT. The Nets host the Cavs at 7:00 eastern. That's followed by the T- Wolves and the Clippers. The winners clinch the seventh seed in their conferences. The losers, though -- they are still alive. They'll face the -- for the eighth seed play-in game, the winners of tomorrow night's nine-10 games. Lots of numbers there for you.
All right. And finally, twin brothers making some Major League history in San Francisco last night. Taylor Rogers, the closer for the Padres, while his twin brother Tyler pitches for the Giants. And last night they became the first set of twins to ever pitch against each other in the big leagues.
When it was all over, Tyler took the loss after giving up go-ahead run in the seventh inning, while Taylor picked up his third save of the season after throwing a scoreless ninth inning in the 4-2 win for the Padres.
First set of twins to play in the same game since Jose and Ozzie Canseco, Christine, back in 1990. But certainly, a fun night for the Rogers family.
ROMANS: That's cool.
SCHOLES: And I'm sure a dream come true for those brothers getting to face off against each other in the big leagues.
ROMANS: A couple of overachievers that really make their parents proud, I'm sure. All right, thanks so much, Andy.
SCHOLES: All right.
ROMANS: Nice to see you.
Just ahead, new reporting from the Pentagon on what the Biden administration could soon give to Ukraine. And next, President Biden's big announcement today on gas prices.
ROMANS: All right. Just in to CNN, President Biden about to change the rules on ethanol to combat high gas prices.
Jasmine Wright joins me right now from Washington. Jasmine, what's the president going to announce today?
JASMINE WRIGHT, CNN REPORTER: Well, the president will announce new measures to expand ethanol sales as the U.S. faces really high gas prices made worse by that Russian invasion into Ukraine.
So when we see the president today in Menlo, Iowa, we expect him to announce that the Environmental Protection Agency will issue a new emergency waiver permitting the year-round sale of E15 gasoline, which contains a 15% ethanol blend. And now, that would reverse a longstanding rule that sales during the summer are prohibited because of air quality concerns. Now, that's something that former President Trump tried to reverse but it was overturned by the courts.
Now, by doing this, the White House believes that it could save up to 10 cents a gallon and reduce the reliance on foreign fuels. That's something very important there. And, of course, in addition to this new rule that they'll announce, they'll also continue to release about one million barrels a day of the U.S. Strategic Petroleum Reserve for the next six months -- a part of that wartime bridge to increase oil production.
Now, of course, Christine, this all comes in front of the backdrop of this Russian invasion in Ukraine, and it is something that is having the effect of pushing those already high gas prices higher. And now, we know that presidents, time and time again -- they pay at the ballot for these high gas prices. You can see $4.10 today; a month ago, $4.32. So, still around that $4.00 number.
And so, this is a -- just another effort of the Biden administration trying to tackle those high gas prices not only just for Americans every day but, of course, as the midterms grow closer and closer and closer.
Now, one thing that they won't do at this point Christine is put sanctions on Russian exports, trying not to put an extra burden on the world's allies that may depend on it. But they are still putting in place that banning of Russian imports to the U.S. for their energy -- really trying to stop it there, along with the amount of sanctions that they've already put in place trying to really squeeze the Russian economy -- Christine.
ROMANS: Yes, and issue number one -- issue number one for this White House has been inflation and trying to tell the American people we know -- we feel your pain on inflation. We're doing what we can on gas prices even though they don't have, really, that many levers to pull.
All right, Jasmine. Nice to see you.
Let's get a check on CNN Business this morning. Looking at markets around the world, Asian shares have closed mixed. Tokyo down almost 2%, and Europe has opened down. And stock index futures -- U.S. futures mixed here.
On Monday, stocks fell. U.S. interest rates the story here. Rates climbed to a 3-year high. The yields on the 10-year Treasury note, 2.78%. That suggests a slowing economy ahead.
Tech stocks like Microsoft and NVIDIA tumbled sharply because of those higher interest rates.
Corporate earnings season starts later this week, which should give some indication how companies are navigating this higher interest rate landscape.
A key inflation gauge is due in just hours, likely to show red-hot inflation. But U.S. oil prices dropping sharply. They're not at their lowest level since the start of Russia's war with Ukraine. U.S. crude falling 4% Monday -- $94.29 a barrel. That's the lowest since February 25 and a sharp decline from the high last month. Remember, that was over $130 a barrel.
The latest sell-off is driven by concerns about demand for oil as Shanghai and other cities in China have these COVID lockdowns, and worries about slower economic growth in the U.S., or even a possible recession also a factor there.
So, watching those oil prices. That inflation number comes out in just about 2 1/2 hours.
Thanks for joining us this Tuesday morning. I'm Christine Romans. "NEW DAY" picks it up right now.