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American Morning

America Votes 2005; Riots Continue in France; Oil Companies on Capitol Hill; 'Minding Your Business'

Aired November 09, 2005 - 07:30   ET

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

CAROL COSTELLO, CNN CORRESPONDENT: King Kong and is even holding Fay Wray there and he's called King Mike and that's because he won by some 30 points.
SOLEDAD O'BRIEN, CNN ANCHOR: And there's Freddie Ferrer.

MILES O'BRIEN, CNN ANCHOR: Yes, poor Freddie Ferrer.

SOLEDAD O'BRIEN: He's on there.

MILES O'BRIEN: Yes. Well that's just one of the we're looking at.

SOLEDAD O'BRIEN: Everybody . . .

MILES O'BRIEN: Arnold Schwarzenegger had a big setback. Virginia and New Jersey, Democratic governors.

SOLEDAD O'BRIEN: Governor choices.

MILES O'BRIEN: So, you know, this all kind of fits into a general picture of issues with the Republicans kind of midway through the second term of the Bush White House.

SOLEDAD O'BRIEN: Yes, we're talking about that this morning as well with Bill Schneider who, obviously, is CNN's senior political analyst.

Bill, good morning to you.

Let's run through the big winners and the big losers too this morning. First, the contest for governor. In a nutshell, good day for Democrats, bad day for Republicans with some big exceptions like Mike Bloomberg. This Virginia race, though, was being closely watched for a number of reasons, right?

BILL SCHNEIDER, CNN CORRESPONDENT: That's right, it was closely watched. That is a very red state. Virginia has not voted for a Democrat for president since Lyndon Johnson in 1964. So the Republicans had high expectations there but it was carried in what was supposed to be a close race, it didn't turn out to be that close, by a Democrat. And, in fact, Republican he got over 50 percent of the vote. So the fact that there happened to have been a minor party candidate who was a Republican on the ticket didn't mean anything. The Democrat won a clean victory. And President Bush was in Virginia the night before the election to rally Republicans, put himself on the line there and it still went Democratic.

SOLEDAD O'BRIEN: All right. So then what do we read into that? First, for Republicans as they head into '06? I mean, you know, to a large degree, people say that there were missteps made by the candidates. And you know, frankly, by all candidates on all sides at some point. So can Republicans read something into that victory there?

SCHNEIDER: They can read that President Bush is not very popular right now and that it is not to their advantage politically to closely associate themselves with President Bush or to use him in their campaigns. Now a year from now, all that can change. What 2005 tells us is about 2005, not necessarily 2006 because that's a year away. But for the moment, a lot of Republicans are going to be saying, we don't really have a political interest in embracing President Bush, his program and his policies right now. Maybe we should go our own way.

SOLEDAD O'BRIEN: But isn't it easy to overstate the impact on the White House? I mean really we saw the president fly in at the 11th hour and do some kind of big campaigning. But the candidate, Kilgore himself, made some big mistakes every step of the way, or a lot of steps of the way.

SCHNEIDER: He ran some very controversial advertising. And I think you wouldn't attribute this whole loss to President Bush. The real reason for that outcome in Virginia, I would say, is the popularity of the incumbent Democratic Governor Mark Warner who scored a big win. Kaine, who got elected, was Warner's lieutenant governor. He ran as part of the Warner/Kaine team. Warner campaigned for him and Mark Warner is very likely to become a Democratic presidential candidate in 2008. This is a big feather in his cap.

SOLEDAD O'BRIEN: So maybe the biggest implication overall for the governor who cannot, because of term limits, run again?

SCHNEIDER: That's exactly right. It's the only state where you can only get one term.

SOLEDAD O'BRIEN: Let's talk a little bit about Arnold Schwarzenegger. The four ballot measures failed. He was not, obviously, on the ballot, but what does it mean for him personally?

SCHNEIDER: It's a big setback. There's a lot of disillusionment here in California with Governor Schwarzenegger. And the reason is that he divided the state, just like a lot of people criticized President Bush for dividing the country. He had a lot of political capital, Schwarzenegger did, coming out of the recall campaign. For a year, he worked with Democrats and independents. This year he decided to pick some fights to spend his capital. A there was lot of division in the state. He went to war with the Democratic legislature and with the public service unions and they fought back. Spent a lot of money. Outspent him at the polls and the voters sent him a loud and clear message, don't divide us. Which is, in many ways, the same message they were sending to President Bush.

SOLEDAD O'BRIEN: Do you think that the cost also had a big message, too? Because it wasn't cheap.

SCHNEIDER: No, the election here in California, it is estimated cost a quarter of a billion dollars! $250 million. The most expensive state race for any office any time in history. And the unions actually outspent the governor. They got what they wanted. They defeated all of his propositions. But I think, you know, the voters are very worried and angry really about the expense of this election. And remember, it was Governor Schwarzenegger who called this election and put those measures on the ballot. And one thing you heard from voters I was at the polling places yesterday was, a lot of them were saying, we think this whole election is an unnecessary expense.

SOLEDAD O'BRIEN: In a nutshell, looking toward '06 and '08, what are you looking for?

SCHNEIDER: Well, Bush has to figure out a way to recover. So does Governor Schwarzenegger. A year, as I say, is eternity in politics. Look, it's only a year since President Bush was reelected, but each candidate, Schwarzenegger, Bush, has to figure out a strategy. The strategy is simple, a unifying strategy. Try to be bipartisan, cooperative, reach across party lines. Don't divide us, that's what the voters are saying.

SOLEDAD O'BRIEN: I bet on some campaigns a day is an eternity.

SCHNEIDER: Yes, exactly.

SOLEDAD O'BRIEN: Bill Schneider, always nice to have you. Thanks, Bill.

SCHNEIDER: Sure.

SOLEDAD O'BRIEN: Other stories "Now in the News."

MILES O'BRIEN: Hey, I misspoke, though, before we get to that.

SOLEDAD O'BRIEN: What?

MILES O'BRIEN: It was "The Daily News" actually figured it out. It was $92 a vote . . .

SOLEDAD O'BRIEN: Oh, really?

MILES O'BRIEN: For the Bloomberg race. $66 million and whatever that come out to, $92 a vote.

SOLEDAD O'BRIEN: I could have just gotten the money.

MILES O'BRIEN: I didn't want to sell the mayor short. He spent $92 for each vote and he should get credit for that.

COSTELLO: And it was money well worth it apparently.

SOLEDAD O'BRIEN: Apparently.

MILES O'BRIEN: Apparently so.

SOLEDAD O'BRIEN: (INAUDIBLE) "New York Post" this morning. I have other news to tell people about.

Rioters took to the streets again in parts of France overnight. Nearly 600 cars were set on fire in a 13th night of violence. But there were apparently fewer clashes with police. Curfews are now in effect in some neighbors. Chris Burns live in Paris this morning.

Chris, are the measures working?

CHRIS BURNS, CNN CORRESPONDENT: Well, hello, Carol.

I think they are in some ways. If you look at the town of Amya (ph) in northeastern France, actually part of an old World War I battlefield, it is no longer a battlefield between police and rioters, it is now fairly quiet. The police there are crediting that curfew. In other parts of the country as well. But not that many cities so far are using that.

But, on the other hand, you're seeing other cities where it has been exploding, nevertheless. In Tolues (ph) in southwestern France, police were clashing with rioters there as well. In two other cities, stores were looted and burned. Leo (ph), the second biggest city in the country, had to shut down its subway system because one of the station was hit by a fire bomb.

So the violence is not over, but authorities are crediting that, as well as much more police presence. Thousands more police on the streets to try to fight nearly two weeks of rioting by mainly youth from mainly immigrant families who are subject to a very high unemployment and discrimination.

Now, I also talked to a community leader. Those community leaders are very active in trying to persuade youth from stopping their rioting and this is what he had to say.

BRIMA CONTEH, COMMUNITY LEADER: We would like to hear, first and foremost that, yes, OK, we've heard your message. We don't really support the way you vent your anger, but we've heard your message and we are ready to talk. We recognize that there have been injustices and we are ready to tackle them all together as one community.

BURNS: And that is where the government is also trying to pick up there, that lead, and to stop the violence by fighting it with more job programs, more training. The government is about to announce a new education program today.

Carol.

COSTELLO: Chris Burns live in Paris this morning.

Turning our attention to Iraq now.

A suicide bombing in Bakava (ph) north of Baghdad. Sources telling CNN, at least seven Iraqis were killed. Four of them police officers. Another four people were hurt in that attack.

And U.S. troops backed by Iraqi forces are still working to clear out insurgent hot spots ahead of next month's elections. It is day five of Operation Steel Curtain. Coalition forces are using air strikes against suspected al Qaeda weapon sites.

Secretary of State Condoleezza Rice is set to host Iraq's deputy prime minister, Ahmed Chalabi today. You know, he used to be a close Washington ally but is now under suspicion for passing American secrets to Iran. Chalabi denies any wrongdoing. U.S. officials tell CNN that an FBI probe into the allegations is ongoing, but, yes, he is going to meet with Condoleezza Rice this morning.

British Prime Minister Tony Blair is asking members of his government for more support of anti-terror law. Under Blair's plan, terror suspects could be held for 90 days without charge. The prime minister was making his case before lawmakers just a short time ago.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: These are the police saying to us they need these powers to prevent terrorism in this country. In the last week, we have learned that since the 7th of July, two further terrorist plots have been foiled in this country.

(END VIDEO CLIP)

COSTELLO: British lawmakers are set to vote on Blair's plan later today. It's being seen as a major test of his authority.

China is warning of a potential terrorist attack. Police there say it could be planned for next week. The U.S. embassy in Beijing say Islamic extremists may be targeting luxury hotels within the country. The warning comes ahead of President Bush's visit to China and that's set for November 19th.

People in Southern Indiana are coming home today to pick up whatever remains of their belongings. It's feared there won't be much. That after a deadly twister leveled their mobile homes. Residents will be allowed back for about two hours and then they have to leave. President Bush has approved emergency funding for people living in the area. As you know, the twister killed at least 22 people.

And Boeing is on course for a record-breaking 23-hour flight. Some 35 passengers and crew set to take off from Hong Kong in just about two hours. You know Richard Quest is there. He's going to take this flight. He's a crazy man, isn't he? The 12,500 mile flight will take them more than halfway around the world. He's see two sunrises on the trip. Boeing will use four pilots to make the flight and that will give them a chance to rest because you don't want a tired pilot flying the plane. The jetliner is said to arrive in London tomorrow. And as I said, Richard Quest will be on board the flight and he's ready.

SOLEDAD O'BRIEN: Talking about giving your all for the company. I mean, that's ridiculous.

MILES O'BRIEN: I will tell you, I would just as soon not be in the seat next to him, though. He'd be talking all the whole time.

SOLEDAD O'BRIEN: Really loud.

MILES O'BRIEN: And can you believe . . .

SOLEDAD O'BRIEN: Look, a sunrise. A sunrise.

COSTELLO: He's going to call us from the plane tomorrow morning.

SOLEDAD O'BRIEN: Oh, is he.

MILES O'BRIEN: Oh, I'm sure he well.

COSTELLO: Yes, and that will be irritating for passengers too.

SOLEDAD O'BRIEN: In the air?

COSTELLO: In the air he's going to call us on one of those . . .

MILES O'BRIEN: He'll be whispering because everybody's asleep! It's to bad they don't have relief passengers, too. That would, you know, give people a break.

SOLEDAD O'BRIEN: You can move. I'd like to move my seat.

MILES O'BRIEN: All right, let's get to weather right now.

Jacqui Jeras, would you fly 23 hours?

(WEATHER REPORT)

SOLEDAD O'BRIEN: Ahead this morning, Congress wants some big answers from those big oil company executives. Are Americans getting gouged at the pumps? Sure feels like it some days. We're going to get the industry's . . .

MILES O'BRIEN: Most days.

SOLEDAD O'BRIEN: Every day, really. We're going to get the industry's side of the story. That's coming up next.

MILES O'BRIEN: But first a question for you. What is the average price of gas in France? Is it $4.72 a gallon, $5.72 a gallon or $6.72 a gallon. We have converted to gallons and dollars for your benefits because they do liters in France. Anyway, the answer and that's very complicated if you're over there. The answer after a break. Stay with us.

(COMMERCIAL BREAK)

MILES O'BRIEN: OK. Before the break, we asked you, what's the average price of gas in France. The answer is b, $5.72 a gallon. Of course, they have a lot of taxes there. Prices have been above $5 all year there in France.

Big doings on Capitol Hill today. A couple of congressional committees will call on the carpet some leaders of big oil and they'll ask them some questions about pricing. Joining us right now is Red Cavaney, who is president of the American Petroleum Institute in our Washington bureau. A group that represents the big oil companies.

Good to have you with us, sir.

RED CAVANEY, AMERICAN PETROLEUM INSTITUTE: Good morning, Miles.

MILES O'BRIEN: Let's do some math here. I'm not an economics major, but I just want to go through this and see if you can help me understand this. We did just a little bit of number crunching this morning. The price per barrel of oil, September to September, has gone up 31 percent. The average price of gasoline at the pumps, September to September, up 45 percent. The change in profit for the third quarter, which would include September, year-to-year for the three companies that are testifying today, the big oil companies, up 55.93 percent. Actually, these are five companies we have combined there. It seems as if the profits are not supported by the rise in crude oil prices.

CAVANEY: Well, when you look at the profits, it's very important that you determine, you know, what is the net income for dollar of sale. That will give you an idea of how the industry compares in terms of its profit level compared to other industries. And we're at about the all industry average, which as historically been the case over five or 10 years where a cyclical industry and we invest over the long-term and it's important to look over the cycle, as well as any small period of time, a months, two weeks, whatever the case may be.

MILES O'BRIEN: But just help me understand. Let's put that graphic up one more time. If the price of crude oil goes up 31 percent, how is it that the profit goes up collectively almost 56 percent? Explain that.

CAVANEY: Well, first of all, you have to look, as I said, over a longer period of time. You can't just take a small snapshot. If you historically look at the price of crude oil, it's determined by world market. None of our companies have any say on what the price of crude oil is. So we have to use that as our raw material to make gasoline, diesel, whatever the consumer is using at the time. And historically, the price of gasoline, the price of diesel, tracks very closely to the price of crude oil over time.

MILES O'BRIEN: But in this case, it doesn't?

CAVANEY: Well, you're looking at a small period of time during which there was a tremendous upset. We had the storm of a century when two category five hurricanes crippled about 30 percent of the refining capacity in the United States. We've recovered. Over the last five weeks, gasoline has fallen about 20 percent, if you look at the average price of regular gasoline, and that's the steepest decline that the Energy Information Administration has seen in a 15 years of collecting data. So the market is working and we are in a period of time in which there was a blip, not a consistent period.

MILES O'BRIEN: But isn't that precisely the point? There were some extenuating circumstances and the allegation is that the oil industry has taken advantage of those circumstances to raise prices higher than would be supported by the economics?

CAVANEY: That's not correct. What happened when all of that capacity went down, we had to go out into the open market and we had to purchase oil from abroad and we had to purchase refined product from abroad to bring in so we could replace what we didn't do. We had to meet the world price to get those refined products, principally gasoline, and that's what the price we had to pay. The profits, if you look at the companies that they reported over the quarter covered by the period you're talking about, you'll find that we' at about the all industry average, significantly lower than many, many other household names like GE, McDonald's and the other.

MILES O'BRIEN: It sure seems like a lot of money to us.

Let's talk I want to throw in a poll here. We just recently did a CNN/"USA Today"/Gallup Poll. We asked people what they think. The question, "are gas companies charging fair prices?" Seventy-nine percent of people say no. Does the oil industry care that people feel that skeptical about what they're paying for at the pump?

CAVANEY: We do care. But this comes against the backdrop of an extraordinary increase in price as a result of Katrina and what happened to our facilities down there. I think as you just showed, the price of gasoline in countries like France and elsewhere is significantly higher than it is here. We've seen the prices coming down and it's a case of supply and demand. If people practiced conservation as we get all of our facilities back, we're going to continue to see that the price of gasoline is a good bargain for consumers.

MILES O'BRIEN: It's a bargain? Really?

CAVANEY: At when we're at normal prices, not through the period we've just been in. This was a very unusual circumstance, a period that happens only once in a century when two storms like this land hurricanes right on top of the heartland of our operations down in the Gulf Coast.

MILES O'BRIEN: Should there be a windfall profit tax of some kind?

CAVANEY: Windfall of profits, first of all, assumes you make profits more than the ordinary. And as I've said, any data you look at will show that the industry does not. Most importantly, Congress' own research arm in 1990 took a study that looked at the period when we did have windfall profits in the early '80s and concluded the one inescapable outcome is, you significantly reduce U.S. production and you significantly increase the imports of foreign oil. And if that's what the lawmakers want, that's what they ought to vote for. But most of them speak against increasing our reliance on imports and, therefore, the wrong prescription would be to try and adopt a windfall profits tax.

MILES O'BRIEN: Thanks for your time. Sir Red Cavaney is president of the American Petroleum Institute.

CAVANEY: Thank you.

MILES O'BRIEN: Soledad.

MILES O'BRIEN: Well ahead this morning, we told you about that big case of identity theft from ChoicePoint. Well, guess what? It's gotten even bigger. We'll take a look at who's at risk as Andy minds your business just head this morning. We're back in a moment.

(COMMERCIAL BREAK)

SOLEDAD O'BRIEN: Guess what? We're talking about identity theft again this morning. Andy Serwer's "Minding Your Business." And it is not good news out of ChoicePoint once again.

ANDY SERWER, CNN CORRESPONDENT: Once again, ChoicePoint. And we haven't talked about this story in a few months but, of course, identity theft is one of those stories that, unfortunately, hasn't gone away.

ChoicePoint, you may remember back in February, announced that 145,000 individuals may have had their files improperly accessed, as they say in the business. ChoicePoint is a company that manages databases of information on consumers for banks and insurance companies. Now we are learning that 17,000 more files on consumers has been breached. Adding insult to injury, I guess you can say.

Also interesting, you guys. We found out that 750 cases of those 145,000 actually had their identity stolen and used in a situation that was improper. So you can see 750 out of 145,000. It's not that many, but, you know, still, it's a problem and it really is. Bless you!

MILES O'BRIEN: Are you OK. Bless you.

SERWER: Your allergic to identity theft!

MILES O'BRIEN: To me that seems . . .

SOLEDAD O'BRIEN: You know, I'm sure, you know, with every single scenario, there was a point where we were reporting on identity theft all the time. I mean every day there was another story. At some point, you know, it's going to be a huge problem. What legislation is out there to protect people?

SERWER: Well, and, in fact, Soledad, there is a bill winding its way through Congress and it's called the Data Accountability and Trust Act. And it sounds good and it's there to protect individuals, obviously, against this kind of thing, but the "Houston Chronicle" has gone through the bill and found out there's an interesting little line here that says, only if the personal information is in electronic form in which there is a significant risk of theft. So it's up to the company itself to decide what's significant, which is possibly a serious flaw.

SOLEDAD O'BRIEN: It's all in the wording.

MILES O'BRIEN: A little wiggle room you might say there.

SERWER: A serious exactly.

MILES O'BRIEN: But, you know, 750, it doesn't seem like a big number. That's 750 total nightmares.

SERWER: What if it was you. Right. Exactly.

MILES O'BRIEN: You know, really.

All right. Speaking of the opposite of that.

SERWER: Yes, speaking of the opposite.

MILES O'BRIEN: Dreams come true but it could become a nightmare because you know how this goes with these lottery winners.

SOLEDAD O'BRIEN: There they are.

MILES O'BRIEN: It's often bad.

SOLEDAD O'BRIEN: We're so happy for them.

MILES O'BRIEN: Sour grapes. Oh, they'll be miserable in a year.

SERWER: They're so lucky.

SOLEDAD O'BRIEN: This is the Powerball winners.

MILES O'BRIEN: Yes.

SERWER: In Oregon, right?

MILES O'BRIEN: Yes, $340 million. In Oregon. Remember that. We talked a lot about this thing.

SOLEDAD O'BRIEN: Steve West, Carolyn West, the in-laws, Bob and Frances Cheney. The four of them are going to split the $340 million.

MILES O'BRIEN: Suffice it to say the family is growing by the minute.

SOLEDAD O'BRIEN: Yes.

SERWER: A lot of relatives coming in there, right?

SOLEDAD O'BRIEN: You know the story behind this. She bought $40 worth of Powerball tickets. Her husband was didn't support it. The in-laws, her parents, wanted the tickets. And now she was right.

MILES O'BRIEN: She called it a small act of rebellion.

SERWER: I think . . .

MILES O'BRIEN: And now he's on board. You might say he's on board.

SOLEDAD O'BRIEN: I think she they got she bought him a yellow Hummer.

SERWER: Yes. That's not see that's not a good take that money and buy oil stocks and have it grow even more. That's what they should do, right?

MILES O'BRIEN: Well, yes. It's always a bad sign when they start buying a lot of vehicles.

SERWER: Yes, bling bling.

SOLEDAD O'BRIEN: Oh, come on. Good for them. I'm so jealous. I really wanted to win, but I guess not this time.

MILES O'BRIEN: They should guard their identity, that's for sure.

SOLEDAD O'BRIEN: Thanks, Andy.

We're got a look at the top stories right after the break. We're talking about the election day results. We're back in just a moment. Stay with us.

(COMMERCIAL BREAK)

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