Will Your Grocery Bills Go Up Due to Flooding in the Midwest?; The Future of Flying: What You Need to Know; The Debate About Energy
FREDRICKA WHITFIELD, CNN ANCHOR: Wildfires shut down sections of the scenic Highway 1 near Watsonville yesterday. The fast-burning wildfires consumed more than a dozen homes and bars and forced the evacuation of more than 2,000 people. In the Midwest, the worst appears to be over along the swollen Mississippi River. But the damage is done. An Iowa official says the floods may have caused some $3 billion in crop losses. Wiping out 10 percent of the state corn and 20 percent of the soybean crop. At least 54 people have been killed by monsoon floods and landslides in eastern India. Flooding is so severe helicopters and ferry boats are being used to get food and drinking water to the thousands of villagers. Speed boats, they are being used to get some people to higher ground. In southern Afghanistan, roadside bombs today killed five soldiers serving under the U.S. and NATO coalition. At least 32 troops, including 12 from the U.S., have been killed this month alone at the coalition battles a resurgent Taliban. And after a last-minute delay, a man convicted of killing his ex- girlfriend's parents was executed last night in South Carolina. James Earl Reed was the first person in nearly a year to be executed by electric chair in the U.S. Reed has been on death row for 12 years now. The execution was delayed when a federal judge issued a temporary stay but an appeals court overturned it just a few hours later. Painful memories in Wisconsin. The house where six young people were killed in a shooting rampage last year was torn down today. The deaths at the hands of a jealous off-duty sheriff's deputy stunned the small community. The site will now be used for a memorial. We will update the top stories at the bottom of the hour. Now time for</s>YOUR MONEY. ALI VELSHI, CNN HOST: Welcome to YOUR MONEY. We look at how the news of the week affects your bottom line. I'm Ali Velshi. Devastating floods hit the Midwest with up to 20 percent of Iowa's corn crops destroyed. We are going the find out if that means that your grocery bills will jump even higher this summer. Also, with airlines ready to charge for everything from bags to soda, we are going to take a look at the future of flying. What do you need to know before booking your next trip? And foreclosures, up more than 150 percent in the last we are, 73,000 families losing their homes to bank repossessions in May alone. Greg Hunter joins us with an eye-opening look at the little guy fighting back in the foreclosure frenzy. But first the race for the White House includes the usual campaign rhetoric about the need to wean America off its dependence on foreign oil. However, with gas prices at record highs, there is a new sense of urgency entering the debate about energy between John McCain and Barack Obama. CNN's MONEY.com's Poppy Harlow joins us now with a look at where the candidates stand when it comes to their energy policy. You have been doing this energy fix for us here at CNN. We are drilling down, no pun intended, get are getting more specific on energy policies.</s>POPPY HARLOW, CNNMONEY.COM: Very specific especially now that we have the two presumptive nominees. They are not on the same page. Sky- high oil prices mean Americans are paying big bucks for energy. John McCain laid out his energy policy this week and he drew some clear distinctions of Barack Obama from voters to consider. The short term, Senator McCain wanted to give drivers a break from the federal gas tax this summer. He is focused on producing more oil here in the U.S. In other words, tackling the supply and demand problem by increasing supply. In addition to easing restrictions on new refineries, McCain wants to lift the current ban on offshore oil drilling. The energy policy, though, is his design to increase this country's use of nuclear power. McCain insists it is safe and efficient and has said 100 nuclear plants was his ultimate goal with 45 new nuclear reactors in place by the year 2030. On the other hand, Barack Obama opposes nuclear power. In fact, there is not a whole lot he agrees with Senator McCain on when it comes to energy policy. Obama called the gas tax holiday a gimmick or just a band-aid fix and he says offshore drilling of oil would have a negaeligible effect on gas prices. Instead Obama is focused on doubling fuel economy standards to 50 miles per gallon by 2026. Both candidates have big goals for our country.</s>VELSHI: John McCain, whether you like it or not, has staked out a position on this offshore drilling. But it is not entirely clear. It is entirely clear it is not going to have any immediate effect on gas or oil prices. These are long-term solutions. We are probably starting to think more about that as Americans.</s>HARLOW: Certainly thinking about long-term solutions. Now I think for both the candidates they are looking down the road because certainly what we are doing right now, depending a lot outside of America for our oil, that's why it is not working. They want a long term fix, not a band-aid.</s>VELSHI: Let's continue to talk about this. The kind of thing that our viewers want to talk about. You want to talk about. I will bring in Stephen Schork, he is the editor of the "Schork Report" and he is an energy commodities expert. Stephen, good to see you. Many people wake up in the morning to your overnight reports on what is going to happen to the price of oil on a daily basis. It seems that for all of the things we hear about that bring the price of oil down, a little bit, we are still sustaining these very high levels and that means record gas prices. Is there anything the candidates can do that's going to have an effect on oil and gas prices now or within the next six months or a year?</s>STEPHEN SCHORK, EDITOR, "SHORK REPORT: " No. Not in the next six months or the year. All of the potential solutions are long term. And that makes sense. We got into this predicament over the last 30 years. This was a problem 30 years in the making and it will be a solution that will be 10, 15 years before we see any sort of -- the difference with the candidates is that John McCain is trying to offer a little bit of coherency to the market. He's trying to address an issue on the supply side. Because, again, a lot of the speculation in this market is driving prices higher because there is strength between global spare capacity and demand. We have watched over the last two generations demand; not only in the United States, but around the world continue to grow. Yet we sat on the sidelines the last 30 years twiddling our thumbs, whistling in the dark, hoping the supply situation was going to take care of itself. You know what? It is not. We have high prices today. They are going to remain.</s>VELSHI: If you think it is a supply problem, meaning we need to find more oil and there is more oil out there, the John McCain solution holds some water. The Democrats and Barack Obama have been talking more about a destruction of demand scenario. Creating a situation where we just depend less on oil. Which one of these makes more sense? I'm speaking from the perspective of our viewer who is going to try to make a decision about who on to vote for in November. Which one is going to make more sense for the long-term price of oil and gas?</s>SCHORK: Well, if you want to continue to pay higher prices that are how we get the demand. Go with the Obama. He is telling us that high prices are here to stay. We do have a demand destruction. But you have to address this issue on both sides of the equation about supply and demand. Demand is taking care of itself. We are pulling back and we are conserving and driving less here in the United States, if you look at the strikes that are happening all over Europe right now, there's clearly demand destruction in Europe as we now believe there is demand destruction in the Far East. We are taking care of that one side of the issue. But we also must address the supply issue. And what Obama is offering is no solution on this supply side. At least with McCain's plan we are going to address the supply side. That's no silver bullet. It is no quick fix. Again, we will continue the demand side. You have to -- you have to love these to high prices. Because these high prices are, again, telling demand which is for the environment means less -- on the Democratic side you are -- we have the issue with demand destruction, higher prices. We don't see any issue with how we are going to address our supply needs going forward.</s>HARLOW: You know Stephen, let's tack about the millions and millions of profits that these oil companies are making, Exxonmobil record profits over $40 billion last year. Obama says it is obscene and we should have a windfall profit tax on these companies. Is that going to help at all for me at the gas station?</s>SCHORK: Absolutely not. I mean, here in Philadelphia when -- when Obama was running for the primary, he didn't call it a tax. He called it a windfall profit penalty. My goodness. This is the United States. When did making a profit all of a sudden become illegal? On this issue the Democrats are clearly stating that they are determined not to be outdone by the Republicans when it comes to energy profit. Yeah, I know $40 billion profit. That's a big number. That's a 40 with nine zeros behind it. Have you looked at what their revenues were? In the second quarter Exxon made $10 billion. They did that on revenue of $116 billion. Which means Exxon only made 10 cents on the dollar. There's nothing egregious.</s>VELSHI: They just happened to sell a lot of the oil. Stephen I'm going to get on a plane and go up to northern Alberta, into the oil sands. In Northern Alberta where they say there's more oil available there than Saudi Arabia. What's the thing we have to look for there? Is that part of our future in terms of consuming oil?</s>SCHORK: Absolutely. This was -- what allowed the western oil companies to thumb their nose when Chavez when he went ahead and nationalized the oil industry in Venezuela. They pulled out of the project because they could lean on western Canada and as you alluded to estimates now have enough oil up in Canada as there is the entire peninsula. Now, this is a hard to, get to refine oil. It is essentially synthetic oil. So, therefore, it requires a higher price. You need oil prices at least $50 to $60 to justify to do that. At $140, look, they are going like gangbusters and it is within our future, in our grasp.</s>VELSHI: Get your e-mail available, I might need some questions answered while I'm up there. Stephen Schork, always a pleasure to talk to you. Stephen Schork is a publisher of the "Schork Report." Poppy Harlow does out energy fix for us and she will be back a little later in the show. Because she had a great conversation with the CEO of Southwest Airlines. And nickel and diming us all. You want to stay tuned for more from Poppy later on. Coming up, whether or not you live in an area that has been hit by those recent floods we were talking about earlier, you are going to feel the effects. What the floods mean to your food prices, coming up next on YOUR MONEY. Stay with us.