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American Morning
Energy Crunch: Americans' Fears Set Congress, Markets in Motion; One Family Buys Hybrid Gas-Electric Car
Aired May 17, 2001 - 10:02 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Twenty of the Bush's recommendations for energy would require Congressional approval, so the White House needs all the support it can get on Capitol Hill.
Does it have it?
We will find out by checking in with our Kate Snow.
Kate -- hello.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Good morning, Daryn.
In fact, Republicans, generally speaking, Daryn, are very supportive of what White House is about to put out. They have been paying very close attention to this energy policy. In fact, they met with Vice President Cheney yesterday and the day before.
However, privately, even Republicans are expressing a little bit of concern, number one, about the controversial proposal to drill in the Arctic National Wildlife Refuge -- that is a very controversial proposal -- and number two, some Republicans are concerned about the short term and what they can do as a Congress about gasoline prices.
They've been talking about a few options. One of those options is reducing federal gasoline tax. Another is changing standards for gasoline, to make what's sold around country all uniform. Others include temporarily waiving tolls on the roads this summer and providing tax credits right away for energy-efficient homes or cars.
Republicans, however, will quickly note that each of those options carries with it a lot of problems. It's difficult to get some of those things done. For example, if you remove the tolls, then you lose money for the roads and the construction that needs to go on. Democrats, however, are sensing an opportunity here. They are seizing on the moment, and they are saying the administration is not doing enough in the short term.
(BEGIN VIDEO CLIP)
REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: Why is the president so unresponsive to the consumers and small businesses who need relief now? This administration has unprecedented ties to the energy industry, and we think this explains what is going on here. (END VIDEO CLIP)
SNOW: Democrats are offering their own plan, including some short-term measures. One of them is very controversial price controls on electricity out West. They're also talking about, for gasoline, calling on the Organization of the Petroleum Exporting Countries to release more supply of crude oil, and asking the president and the Justice Department to investigate charges of price gouging.
Daryn, back to you.
KAGAN: Kate, how optimistic are Republicans about getting some of these proposals through Congress quickly?
SNOW: They're very optimistic. Again, they say, generally speaking, they think they have most Republicans on board. Perhaps they'll be able to add some other short-term things, through legislation, separate from what the president's asking them to do.
But they do think that they'll get something done up here. In fact, Senate Majority Leader Trent Lott said that he wants to get an energy bill through this Congress by July 4 -- Daryn.
Kate Snow on Capitol Hill, thank you -- Leon.
LEON HARRIS, CNN ANCHOR: The soaring energy costs not only hit us when we gas up the car or turn down the thermostat, they also lurk, less conspicuously, in a merchant's cost of doing business.
For a closer look at the rising cost of doing business, and how that creates market volatility, let's turn to CNN Financial News correspondent Chris Huntington, who's standing by at the mercantile exchange, in New York.
Chris, good morning.
CHRIS HUNTINGTON, CNN CORRESPONDENT: Good morning, Leon.
This is ground zero for setting the price of energy across-the- board. The big picture here is that energy prices have softened in recent weeks. Crude oil prices -- in fact, we're going to show you a shot of the main crude oil prices trading pit -- are trading now at about $28 a barrel. You'll probably recall that, last fall, they as high as $37 a barrel. Similarly, gasoline and wholesale futures are lower, as are natural gas futures.
The big picture is that, in the face of potential rising supply, prices, indeed, are softening. So if, in fact, President Bush is able to get through some of his supply-side initiatives on the energy plan, i's quite likely that we'll see energy prices stabilize, and possibly even come down. Particularly in recent weeks, the refineries, for gasoline in particular, have been able to increase their output, and that has indeed brought wholesale gasoline prices lower -- Leon.
HARRIS: Which company is it that seems right now to be making the most headway out of current climate? HUNTINGTON: Do you mean which companies stand to benefit from the energy situation?
HARRIS: Is there one poised to make a big windfall?
HUNTINGTON: I couldn't quite hear you. Did you ask if there is one company in particular?
HARRIS: I can understand. It's a little noisy there. We can hear the racket going on behind you.
HUNTINGTON: And they say this isn't even loud.
HARRIS: We may see things heat up there a little bit more later on.
But what I want to know is if there's any one particular company or any one particular part of the industry that is poised to make the biggest windfall?
HUNTINGTON: Certainly, the energy exploration companies right now are doing particularly well. Even though natural gas prices have come down a bit from their recent highs, they are at historically high levels. In fact, natural gas exploration in the United States is at a record level, so the companies that are involved with actual exploration and drilling, as well as the companies that provide the materials -- literally the pipes, picks, and shovels -- are doing quite well now.
Higher energy prices in general benefit the major oil companies: ExxonMobil, the biggest one in the business, reported record profits in the first quarter. Most big energy companies are doing very well.
Of course, that draws fire from consumer groups and, indeed, environmentalists, who say, Wait a minute, are these companies gouging?
There's no evidence of that, but basically, it's fundamental that when the prices go up, generally, they will make a bit more money.
HARRIS: Chris, how about the other side of the coin? Is there any company or sector that's poised to go under, perhaps, because of the high cost of energy?
HUNTINGTON: That probably translates onto the consumption side, the user side. For a lot of companies, for instance, that are involved in transportation or delivery, that's the highest rising cost in their business these days. Any company that's got a fleet of trucks that have to do deliveries, for instance, is paying pump prices for their fuel, and is feeling the pinch -- very much so.
HARRIS: I bet your eardrums are feeling the pinch.
HUNTINGTON: Yes.
HARRIS: Chris Huntington, thanks much for reporting live for us this morning, from the New York Mercantile Exchange -- the loud exchange there -- we'll talk to you later on.
HARRIS: The skyrocketing cost of gas may not be enough to make us park our cars, but it may inspire us to travel off the beaten path. For an increasing number of us, that means trading in the gas-guzzler for a car that, some say, offers the best of both worlds: today and tomorrow.
CNN science correspondent Ann Kellan has that one.
(BEGIN VIDEOTAPE)
ANN KELLAN, CNN CORRESPONDENT (voice-over): Other than our presence, it's a typical weekday: up early. She's a lawyer. He's a computer consultant. She's in third grade. Finish the chores, eat a little breakfast, head out the door.
JEFF FOREMAN, HYBRID CAR OWNER: OK, have you got everything?
UNIDENTIFIED FEMALE: Yes.
FOREMAN: You put her lunch in there, right?
KELLAN: What's not typical is the five-seat Toyota Prius Jeff Foreman and his family drive: It's a hybrid. It runs on electricity and gasoline.
FOREMAN: Here's the internal combustion engine. This is the hybrid system. Back here is where the battery pack is.
KELLAN: They love it.
FOREMAN: Turn the ignition to the on position. The computer boots up. This is the gear shift; you just pull that down, and you get to go.
It's quiet. You can be sitting in the carpooling lane at my daughter's school, and the engine will be off. So nothing's coming out of the tailpipe, and we can actually talk in a normal tone.
I love you.
KELLAN: That's because when the car stops moving, everything shuts down automatically. Ease on the accelerator, and typically, the electric motor powers the car. Need more juice? The gas engine comes on.
FOREMAN: The computer is always choosing the best way to maximize the mileage.
KELLAN: The car's video screen shows what's happening. Go up a hill and need extra acceleration, and the gas engine kicks in. Go down a hill, and it's all electric.
And the breaking action helps recharge the battery.
FOREMAN: In terms of how it feels when you're driving, there's virtually no difference.
KELLAN: Unlike normal cars, this car gets better mileage in stop-and-go traffic, with its electric motor, than on the highway, when its gas engine is often needed.
(on camera): I think people think, Electric car, plug it in.
FOREMAN: No, that's not how this car works. You go to any gas station, and you put regular gas in it. And if you're like me, you go every two weeks. The best I've ever gotten is 56 miles a gallon, and the lowest I've ever gotten is about 36 miles a gallon.
KELLAN: What about resale on these cars?
FOREMAN: It's going to be difficult, perhaps, initially for me to recoup all the costs. But can you tell me what the price of gas is going to be in three years? I don't know.
KELLAN (voice-over): Ann Kellan, CNN, Washington.
(END VIDEOTAPE)
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