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'Hardball with Chris Matthews' for August 29

Read the transcript to Monday's show

Guest: Joe Becker, Mary Landrieu, Ivor Van Heerden, Jason Grumet, David Pursell, Richard Shelby, Jeff Sessions, Trent Lott, Kathleen Blanco, Haley Barbour

CHRIS MATTHEWS, HOST:  Hurricane Katrina shifted rightward early today, whacking Louisiana, Mississippi and Alabama with a 140-mile-per-hour punch and storm surges, as predicted, of up to 20 feet.  Tonight, the Big Easy faces hard times. 
Let‘s play HARDBALL. 

Good evening.  I‘m Chris Matthews and this is a special edition of HARDBALL, part of MSNBC‘s continuous coverage of Hurricane Katrina. 
Katrina landed its strongest punch on the Gulf Coast of Mississippi today.  Power is out.  Neighborhoods are flooded, but the longer-term effects of this historic storm just being realized now.  Today, President Bush promised help. 
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Take precautions, because this is a dangerous storm.  When the storm passes, the federal government has got assets and resources that we will be deploying to help you.  In the meantime, America will pray. 
MATTHEWS:  For the very latest, we start with MSNBC‘s chief meteorologist, Sean McLaughlin. 
Sean, where is Katrina right now? 
SEAN MCLAUGHLIN, NBC METEOROLOGIST:  Moving north in the portions of north central Mississippi, up just past toward Laurel, Mississippi, where just a couple of hours ago, this thing is still packing a punch, wind gusts estimated at 110 miles an hour.  It is barely holding on to its hurricane status, as you can see.  It is really starting to get affected by all of the land mass here in the Southeastern part of the United States. 
But when we strip away the clouds and show you these outer rain bands, they‘re extremely active as far as convective activity, thunderstorms.  You can see the severe line right there, another line right there, another line right there.  All of these lines, these outer rain bands, have been producing tornadoes.  Now, what is going to steer it to the northeast? 
Well, a couple of things.  We have got a high pressure ridge off the Eastern Seaboard and a low pressure center, a trough, right up near the Great Lakes.  That is going to help in between these two areas, going to kind of sandwich it north and east, all the way through tomorrow and through the later part of this week, where it is going to be a major rain event, especially tomorrow and tomorrow night in portions of western Kentucky and Tennessee. 
Speaking of rain, let‘s go ahead and switch my graphic sources and let me tell you how much rain we can expect.  This is our Weather Central ESP:LIVE machine.  You can see as the bulk of the moisture moves through, I am going to put in that little dot.  In the center of that dot, just west Biloxi, where the eye wall came in—remember, that right side of that eye wall is the areas of highest storm surge, strongest winds and heaviest rain. 
Take a look at some of the Doppler-indicated estimates, eight to 12 inches of rain.  That is on the coast and then inland several miles.  So, you can see that this is going to be a flooding situation along with the storm surge. 
Let‘s go back to my graphics now and talk about where Katrina is located right now, sustained winds, barely holding on to hurricane status, 75 miles an hour, gusts to 92.  Pressure has been rising all day throughout the afternoon and it will throughout this evening.  That‘s just another indication that thing this is weakening.  It‘s moving to the north at 18 miles an hour.  That‘s another good sign. 
Basically, it is starting to shrink.  Hurricane-force winds only extend out now 60 miles or less as we move into the later evening hours.  Tropical-storm-force winds extend out to about 205 miles, mostly on the southeast side.  At one point, they stretched out over 460 miles. 
Again, because of the high and the low to the north and south, it is going to turn to the northeast, probably lose hurricane status later on tonight and then that major rain event flooding in the upper elevations for western Tennessee and Kentucky.  We still have active tornado watches in effect for most of Alabama, all of Alabama, I should say, portions of Mississippi, Florida, and western Georgia.  The filled-in areas are active tornado warnings.  Destructive winds still out there.  All these blue areas are flood watches.  All the green areas are counties that are currently undergoing active flooding or flash flooding, meaning rising waters, anywhere from one to two feet an hour. 
Basically, a story starting tomorrow and as we head into the Labor Day weekend is getting around the Southeast.  All the Gulf Shore airports will be closed, probably through tomorrow.  But Atlanta has been backed up all day long, as well as Dallas, trying to fly around this weather.  That will be a major concern, as people start to head in to their vacation weekend, as everybody heads back to school. 
Looking back a little bit on the timeline, 7:04 this morning, that‘s Eastern daylight time, basically, what happened?  Landfall, 7:10, Category 4, sustained winds at 140 miles an hour on the southeastern tip of Louisiana, near Buras, Louisiana. 
And you can see, as we watch that eye wall go right through portions of Biloxi, you can see just to the west of Biloxi was the hardest areas hit.  No reporting stations right now in New Orleans, Chris, but by tomorrow, for the cleanup, it is going to be a hot, sticky 91 degrees, not only in New Orleans, but all along the Gulf Coast, as we see the damage from the air. 
MATTHEWS:  Just to give the same kind of warning to the north that you‘ve been giving so well to the south, how high up will we be facing a hurricane in this country?  Will it get past Tennessee? 
MCLAUGHLIN:  I don‘t think so.  I think it is going to lose its hurricane status in the next couple hours.  It will go down to a tropical storm and it will quickly lose its wind strength.  But it is still going to carry that punch as far as flooding, especially western Kentucky, western Tennessee.  But folks in Memphis will definitely see possible tropical-storm-force winds. 
MATTHEWS:  Thank you very much, Sean McLaughlin. 
We‘re going right now to Brian William, who is at the Superdome in New Orleans—Brian.
BRIAN WILLIAMS, NBC ANCHOR:  Chris, let me first give you give you a little tour of the landscape here.  I want to show you the reason we‘re standing in front of the skyline, a beautiful urban skyline on an average day.  Look at those windows blown out.  Just about every first basing building that had an exposure toward the oncoming storm, look at the—the curtains flapping out of the window of the office building. 
And if you come owe here, near me, we have a piece of the fabric roof that was part of our problem today.  It blew off the top of the Superdome.  It‘s 180 feet high, the largest indoor arena in the world.  You‘ll recall, Chris, it has hosted half a dozen Super Bowls.  Pope John Paul II spoke to 80,000 people.  The largest indoor rock concert in history was here.  And yet today, it could not withstand this hurricane.  We were inside.  When the noises started, the roof began to move. 
The fabric cover came off.  The steel plates started grinding against each other and then flapping on top.  You can still hear them doing that now.  And, suddenly, we saw daylight.  Then we saw the rain coming in.  And, tonight, it is raining in a multitude of places on the roof.  The artificial turf is completely soaked, as if it had been a day game outdoors in a stadium.  So, the Superdome has some work to do.  But we should quickly add, the structure itself was never in danger.  And it was a perfectly good home for the most part to about 9,000 people, who are in there tonight.
As I left, they were getting in line for dinner, which is military meals ready to eat and some other catering.  But it tastes pretty good, especially if you don‘t have anywhere to go from here. 
MATTHEWS:  You know, Brian, I was watching your report on “The Nightly News” tonight on NBC.  And I was watching with every person who works in this building, all standing almost in regimental line, watching your report.  I have never seen so much interest in a story as this tonight. 
Do the people there know that they‘re at the center of American interest right now? 
WILLIAMS:  They do not.  In fact, Chris, that‘s a real problem. 
I have to say on their behalf, having lived among them today, yet not sharing the same concerns and the mind-set there, they have been tied up in knots all day wondering if their home is the one on the street that got it, wondering if they go home to water up to the rafters.  They have no information.  Unless someone near you in that stadium or in your aisle has a television or a radio—and they all draw a crowd—if you can get reception inside that building, there have been no announcements. 
The P.A. system, I guess, is not powered by the generators and the power is out.  There‘s no bullhorns, apparently.  No one has been dispatched.  So, a lot of them don‘t know it wasn‘t as bad here as those dire predictions.  A lot of them don‘t know Mississippi coastline got it worse.  And a lot of them don‘t know what it is like tonight and if they can go. 
So, it‘s been, in a way, a terrible information bubble for them, while it was a place of great safety for them earlier today.  So, no, they don‘t know their role right now and how much attention they‘re getting. 
MATTHEWS:  Well, it has been a night to remember.  Thanks for the great report, Brian Williams, who is at the Superdome. 
We‘re joined right now by HARDBALL correspondent David Shuster, who is in Biloxi, Mississippi.  You were at the heart of it all.  It came right through there at 145 miles per hour this morning.  What was that like, David? 
DAVID SHUSTER, NBC CORRESPONDENT:  Well, Chris, it was insane, in fact.
I mean, the power went out.  All the power lines snapped.  You started seeing all the signs in mall areas like this one simply started coming apart.  And the wind was just kicking up.  You couldn‘t walk outside. 
Just to underscore, Chris, how powerful it was, we‘re four miles away from the gulf—the beach, essentially, but so much water was pushed up to the streams and the rivers and the creeks, that it flooded parking lots like this one.  You see some of the cars here that are buried.  And it is going to be a little while until anybody can get their cars out.  
And that was the case all along the Gulf Coast.  Earlier today, we had an opportunity to drive.  A couple hours after the eye of the hurricane went through, we drove through a small town called D‘Iberville.  D‘Iberville has about 6,000 people and it is about two miles away from the beach.  And D‘Iberville was underwater today, six feet of water from the main intersections.  All of the homes were flooded.  The gas stations were completely flooded.  There was even a motorboat that was pushed all the way up from the beach, two miles along the water, and ended up in front of a gas station in D‘Iberville. 
D‘Iberville High School, which has been in school for the last two
weeks, it is going to be some time until any students go back there.  But -
· and, Chris, even as we were touring around D‘Iberville, you couldn‘t even get to Biloxi, where there were some 25,000 to 30,000 people who were estimated to try to ride out the storm, no cell communications, no communications with Biloxi, except for second-hand, third-hand accounts. 

And the problem, of course, is that, in Biloxi, there‘s no real information as to how bad the damage was because you can‘t get there.  The roads to Biloxi are either underwater or the main highway is blocked by power line and the—power lines and debris. 
So, you‘re only getting a second- or third-hand sketchy information about how bad the damage really was.  The damage that we could see, Chris, in D‘Iberville, population 6,000, was just horrendous.  The officials, city officials, thought that most of the residents got out.  But D‘Iberville was one of those cities two or three miles away from the beach that a lot of people thought would be safe.  And look what happened.  It was totally underwater—Chris.
MATTHEWS:  You talked to some die-hards last night, two young fellows that were going to stand it out and stay right down there on the coast all night, within three miles of the coast.  Did they underestimate what we saw or overestimate?  Did we overestimate it? 
SHUSTER:  Chris, I think they underestimated. 
They thought that they were going to be fine.  They were a couple miles from the beach.  But I guarantee that every area was flooded.  The question was, did they have high enough ground on their property to essentially wait it out?  But every—we‘re getting reports that, Chris, everybody who tried to wait it out anywhere near the beach within two or three miles got hit very hard. 
Even if—even if they were able to survive and the flooding was not that bad, the wind damage, everywhere you look, on parking lots, malls, restaurants—we‘re talking now four or five miles from where it hit land.  Everybody has roof damage.  Nobody has power.  Nobody has cell phone communications.  Nobody has fresh water.  It‘s a total mess. 
And so, regardless of whether you waited it out or whether your left, everybody, everybody is suffering who lives in this area, Chris. 
MATTHEWS:  OK, David, we will hear more from you.  I would like to know how your night went. 
Let‘s go right now to NBC‘s Ron Blome, who is in Mobile, Alabama.
Ron, your damage assessment there. 
I think people in Mobile know they were very lucky in this storm.  There was a storm surge downtown along the river.  It went into the downtown area around the government complexes.  But that‘s where it stopped, 10 or 12 feet of storm surge.  And it did not crest over one of the higher streets that flow down into the neighborhoods. 
There were two tornadoes that did touch down just west of town in rural areas, no real damage assessment from that.  The hardest-hit area are going to be the resort beach areas,  Dauphin Island.  We‘re told by one of the county commissioners that it was just obliterated by the storm.  Seven people decided to ride out the storm in their homes.  There‘s no word yet on whether they survived that or not. 
The sheriff‘s deputies are out there trying to get in with some boats and some four-wheel-drive vehicles.  But, still, we‘re trying to get the ocean water to recede, because there‘s still a lot of water downtown.  But, in Mobile, they are very lucky.  There‘s no power and it is a similar situation elsewhere.  But there is no widespread destruction in this Alabama coastal town—Chris.
MATTHEWS:  Thank you very much, Ron Blome, who is in Mobile, Alabama.
Joining me now is Mississippi Governor Haley Barbour.  He is on the phone in Jackson, Mississippi, at the governor‘s mansion. 
Governor, thank you very much. 
Governor, I saw you today.  You were so overwrought emotionally.  What are the casualties that we‘re facing right now?  Do we know yet?   
GOV. HALEY BARBOUR ®, MISSISSIPPI:  No, we don‘t know, Chris. 
I mean, we took a direct hit.  And it was a grievous blow.  And, as your reporter was saying, a lot of people thought they could ride it out, because they‘d been through Camille.  We had areas today that flooded and got under several feet of water that did not flood when Camille came in, in 1969.  This was a massive storm.  And while the winds weren‘t as high as Camille, for some reason, the storm surge apparently was considerably bigger. 
MATTHEWS:  You were hit by what‘s called, I guess, the upper-right, the upper-right quadrant of this, based upon the eye of the hurricane.  I could call it—you could call it the right punch of this hurricane.  It was harder than we thought, right? 
BARBOUR:  Yes, it really was. 
And we knew this was a dangerous storm after I talked to you yesterday.  And people were comparing it to Camille.  And Camille was dreadful.  I have to say, we can‘t quantify with any specificity the damage.  But it is catastrophic.  There‘s devastation everywhere that people can get to.  And there are so many places on the coast that still you can‘t get to. 
MATTHEWS:  How does the federal government get aroused?  Is this something that you as the governor have to push, or is this being pushed by FEMA in Washington, to get a real grasp in the next couple of days of what we are looking at here in terms of damage report?  
BARBOUR:  Well, the president has been great from the start.  And FEMA has been super to work with. 
It is a real team effort between our state officials and the federal officials, whether it‘s FEMA, the U.S. Coast Guard, the military.  The American Red Cross has been unbelievable.  But this has been teamwork and local officials.  It‘s just we got hit with a devastatingly powerful storm that overwhelmed good preparation.
And now we‘re going to be a long time being able to clean up, much less rebuild. 
MATTHEWS:  Is this part of the heart and soul now of living in Mississippi, facing these natural catastrophes every couple of years? 
BARBOUR:  Well, you know, the truth is, one reason we had so many people that stayed is that we had two near misses in the last year.  Ivan, everybody boarded up, evacuated.  Nothing happened. 
Then it‘s earlier this year.  Everybody boarded up, evacuated.  Nothing happened.  We kind of had hurricane fatigue.  The truth is, this is the first really bad hurricane to hit the Mississippi Gulf Coast since Camille, which is probably the worst hurricane that ever hit America.  So, it has been 36 years, but it came back with a vengeance today. 
MATTHEWS:  OK.  It‘s great.  Good luck, then.  We‘re praying for you, Haley Barbour, governor of Mississippi.
BARBOUR:  Thanks, Chris. 
Joining me right now on the phone is Louisiana Governor Kathleen Blanco.
Governor, it looks like the Big Easy got a little break, because, last night, early, when we were reporting, it looked like you were going to get the right punch.  It looks like that was delivered to Mississippi. 
GOV. KATHLEEN BLANCO (D), LOUISIANA:  Chris, the downtown area of New Orleans did survive without as much pain.  But I have to tell you that we have some areas in the city of New Orleans that are under 10 feet of water.  It‘s a very dangerous situation. 
But what we‘re doing now is all about search-and-rescue.  We have had boats moving throughout the region, in spite of high—some continuing high winds.  We had 80 individuals rescued in the general New Orleans area so far and in the St. Bernard area. 
We have boats, six boats that—we had a convoy trying to get in to bring boats in.  And the interstate is flooded.  So, they launched their on the interstate, in the floodwaters, and got to a nursing home in Metairie where there are 100 nursing home patients that are being transferred to safer areas.  They were trapped in an area that‘s flooded in.  We have 25 boats south of the Superdome to rescue individuals stranded in their homes.
And 30 boats are headed into St. Bernard Parish in the Ninth Ward.  We‘re working with state and local law enforcement and emergency personnel in these rescue efforts.  And we also know that there are efforts in St.  Tammany, where we have got a lot of local people helping a lot of the emergency personnel.  We had way too many people thinking that they could ride this thing out.  And we know that we have lost some lives.  We don‘t know what it looks like yet. 
MATTHEWS:  OK, Governor Blanco, thank you very much for joining us tonight on HARDBALL. 
Coming up, how could the energy bill have helped Mississippi to be better prepared to deal with Hurricane Katrina?  We will ask Mississippi Senator Trent Lott.
You‘re watching HARDBALL‘s special edition of Hurricane Katrina. 
We‘ll be right back.
MATTHEWS:  Coming up, who is going to pay for this disaster?  When HARDBALL‘s special edition of Hurricane Katrina returns.
MATTHEWS:  Welcome back to a special edition of HARDBALL, as part of the nonstop MSNBC coverage of Hurricane Katrina. 
Mississippi Senator Trent Lott join us now. 
Senator Lott, my pal, it is good to see you tonight under strange circumstances. 
Is there a large federal role we can expect in dealing with this, especially—I was looking at the Louisiana situation—how much water they‘ve got in that city?
SEN. TRENT LOTT ®, MISSISSIPPI:  Well, we think we have water like that in Mississippi, too, all across the coast, from the part right next to Louisiana, over to my home town of Pascagoula, Mississippi.  We have not been able to get people into the coastal areas. 
But it looks like the whole town has been covered in water.  So, we have got a huge job ahead of us.  It is going to take local resources and involvement.  The state has got to be involved.  And they will, the federal government, all the different agencies of the federal government.  And charities will come in, too, the Salvation Army, Red Cross.  We have been through it before. 
I rode out Hurricane Camille in 1969.  And I swore I would never do it again.  And I haven‘t.  But I‘m in a position where I can—I will be in Mississippi as soon as the winds subside.  And we will take stock of where we are and we will rebuild together again, as we have done before. 
MATTHEWS:  What can a senior senator like yourself with a lot of clout do for that part of the country? 
LOTT:  Well, you know, we have been through it before.  And we have learned how you get set up in advance and how you get disaster locations established shortly after.
Of course, we work with the state and federal officials to assess the damage.  It may turn out we will have to have additional funds, so we will have to work with Senator Cochran, my colleague from Mississippi, perhaps, to get additional funds.  So, do you work with the bureaucracy.  You work with the White House.  You work with the Congress to make sure that we have the resources we need to help these people that have been hit in three states.  It‘s also affecting Alabama, too, of course. 
MATTHEWS:  You mentioned private funds.  You know, we‘re all familiar with the work done by former Presidents Clinton and Bush, raising money for the tsunami victims in Asia.  Do you expect that there might be a major—there‘s a lot of sympathy in this country right now on this, what we are looking at, this horror in your region.  Do you expect that there will be something on that level, at the national level, to raise funds from the private sector for your damage relief? 
LOTT:  Well, you hope so.  And, of course, we have got to assess the damage. 
But, you know, we do care about people who get hit with disasters around the world.  Certainly, we care about people here at home.  I have already gotten at least one call from people saying, we want to help.  We want to specifically help your state.  And, by the way, this call came from Washingtonians, who said, we want to help Mississippi and the people who have been hit so hard.  How would you do that? 
And, of course, you can go through the Red Cross or the Salvation Army.  You can even designate where you want the money to go... 
LOTT:  ... if you go through the Salvation Army.
MATTHEWS:  Thank you very much, Senator Trent Lott of Mississippi.  We will have you back on soon.
Up next, is it still sweet home Alabama?  Both Alabama senators will join us soon live. 
You‘re watching HARDBALL‘s special edition covering Hurricane Katrina, only on MSNBC.
MATTHEWS:  Welcome back to MSNBC‘s special live coverage of Hurricane Katrina. 
Republican Senators Richard Shelby and Jeff Sessions of Alabama join us now by phone. 
Let me start with Senator Shelby. 
What federal relief can you see coming to your part of the country? 
SEN. RICHARD SHELBY ®, ALABAMA:  I see a lot coming. 
We have always responded as a nation to earthquakes, to hurricanes, to tornadoes like this.  And whether you‘re from another part of the country that doesn‘t experience hurricanes like we do on the Gulf Coast, the people in the Senate and the House have always jumped in.  I predict they will again. 
MATTHEWS:  Senator Sessions, your view.  Do you have any particular legislative measures?  Is it the Army Corps of Engineers?  Is it FEMA?  Where can you expect help to even begin to drain those parts of the country you represent in the Senate? 
SEN. JEFF SESSIONS ®, ALABAMA:  We have got a good situation where FEMA is the initial responder and I think are prepared.
They‘ve learned a lot from the many hurricanes last year.  I think they‘ll be more ready this year to respond effectively.  The Corps of Engineers will be a key player in reconstruction and safety and public works.  So, they‘ll be responding well.  The state is engaged fully.  The governor is fully engaged.  I think we will do a good job with that. 
We‘re just thankful at this point that it appears no—there has been no loss of life in the Mobile area, where I am.  And I know that Mississippi and Louisiana probably took it worse than we did.  And our thoughts and prayers are with them. 
MATTHEWS:  Let me go back to Senator Shelby. 
Senator Shelby, there‘s a lot of effort down in your part of the country, along the Gulf Coast, to develop, you know, the whole idea of a resort area.  It‘s been called the Redneck Riviera, fondly, I think.
SHELBY:  We don‘t call it that.  We just call it the Gulf Coast. 
MATTHEWS:  OK, the Gulf Coast. 
SHELBY:  Sure.
MATTHEWS:  I don‘t want to step on any toes at this time. 
But let me ask you, is this going to jeopardize that, when you see this kind of destruction? 
SHELBY:  We have seen in the past, you would think, some of the faint-hearted.  And there are a lot of people—and I think might be one of them.  My power just went off right here in my hometown. 
SHELBY:  But, anyway, we have always seen rejuvenation of these areas. 
You know, we‘re a big country and those are beautiful beaches.  And I believe we will continue to do well. 
MATTHEWS:  All right. 
SHELBY:  We‘re thankful the situation was not worse than it was.  Mississippi and Louisiana have taken a hit.  But we have also taken a big hit.  We‘re trying to assess the damage.   
MATTHEWS:  And we‘re looking at it right now. 
Senators, thank you for joining us on this very grim night.
SHELBY:  Thank you, Chris. 
MATTHEWS:  Senator Richard Shelby, Senator Jeff Sessions, both of Alabama. 
Up next, what impact will Hurricane Katrina have on oil prices?  A lot of people are thinking about that, because that‘s where a lot of oil in this country is refined.  Something like 25 percent of our domestic production actually comes from down there.  How fast before oil companies get back to business? 
And will President Bush be forced to tap into the strategic reserves down in those salt domes down in Louisiana and Texas, which they themselves may have been jeopardized?
We will be right back with HARDBALL‘s special edition in just a moment.
MATTHEWS:  Welcome back to this special edition of HARDBALL, as we continue our coverage of Hurricane Katrina.
The storm roared right through heart of America‘s oil operations, which account for 25 percent of our domestic oil production in this country.  Just how much damage did she do to the oil facilities?  And with the price of crude near record levels, how long before we start to feel Katrina‘s impact at the pump. 
David Pursell is a research principal at Pickering Energy Partners in Houston, Texas.  And Jason Grumet is the executive director of the National Commission on Energy Policy. 
Let me go right now to David.
The salt domes are down there in Texas and Louisiana.  That‘s where we have our Strategic Petroleum Reserves.  Were they in danger? 
DAVID PURSELL, PICKERING ENERGY PARTNERS:  No, Chris, I don‘t think they are.  There‘s only one of the four major facilities that was even close to Katrina. 
Talked to the guys at the Strategic Petroleum Reserve, which is operated by the Department of Energy today.  They‘ll be out doing a site assessment tomorrow.  Really, the only thing that could affect—or the biggest impact there for that facility would be if there was a long-term power outage, where they might have to bring in some auxiliary equipment to operate the reserve if local power is down for a week or two. 
MATTHEWS:  Let me go to Jason with a question that is related to that.
Chuck Schumer, the Democratic senator from New York, called for releasing the petroleum reserves we have in those salt domes, massive amounts of crude petroleum.  Should we do that to release the price? 
POLICY:  Complicated question, Chris. 
I mean, these kinds of short-term disasters are just the kind of reason we a Strategic Petroleum Reserve.  It really exists to try to calm the market in short-term spikes.  But the history of using it has been mixed.  Sometimes, when we have released petroleum, prices have actually gone up.  It actually excited the market, created a sense of anxiety.
MATTHEWS:  How could increased supply raise price?  It makes no economic sense.
GRUMET:  Well, we‘re talking about energy futures traders. 
GRUMET:  And, sometimes, when they see the SPRO being released, they think, oh, geez, now we really have a dramatic problem.  So, you know, it has worked at some points.  And, at other points, it hasn‘t. 
But the key issue here is that this is not a long-term solution.  This is a short-term, kind of momentary response. 
Let‘s talk about the president and the way he‘s addressed the issue.  Of course, the president is a Republican.  He is a conservative on this issue.  He is for massive new drilling, much more production, more refinery capacity.  That‘s been his approach.  We‘re looking now at—we have been looking at these pictures of the refineries, all located down in Louisiana, 25 percent of our production.  Will this raise prices by killing the production in the near term? 
GRUMET:  Oh, absolutely this is going to raise prices. 
And I think, Chris, what our commission determined is, you can‘t drill or conserve your way out of this problem.  We need to dramatically increase global supplies, while dramatically reducing domestic demand.  And we‘re only addressing one side of that equation right now. 
MATTHEWS:  And, in the long run, we have got to compete with the Chinese, who could buy all the oil in the world if they wanted to.
When the 2.4 billion Chinese and Indians join us at the gas pumps, Chris, this is going to be a whole different story.  Global supply is strained so tight right now that almost any interruption, a hurricane, a Venezuelan labor strike, we are...
MATTHEWS:  Our biggest fear right now is driver training in China, all those people learning to drive cars instead of bicycles. 
MATTHEWS:  It‘s going to kill us.
GRUMET:  Everyone aspires to the same wealth that we have.
MATTHEWS:  Let me go back to David for a—give us an on-the-ground sense of what the production situation is likely to be over the next couple of weeks, David.
PURSELL:  Yes.  If you—right now, I think, by this time tomorrow, we will know what the impact of the storm has been. 
If you think back to Ivan last year, Katrina was bigger, stronger, bigger waves.  I mean, it was Ivan on steroids.  You‘ve got the potential to have significant damage to sub-sea pipelines, to platforms.  And Ivan impacted production over a three-month period by almost 50 million barrels of oil, and 170 billion cubic feet of gas was not produced because of the storm.  And you could easily have that kind of an impact from Katrina. 
MATTHEWS:  What is likely to be the bottleneck, the refinery capacity cut or is it the movement of oil, crude oil, into those refineries and out of them? 
PURSELL:  Yes, Chris, I think the refinery—the potential for refinery damage is the single biggest issue out there.  You can release all the oil you want to from the Strategic Petroleum Reserve, but nobody is going to buy it.  Crude inventories are ample.  The real issue is gasoline inventories are near record lows. 
And with refineries flooded and with massive power outages in south Louisiana, you have the potential to have the refinery production offline for two or three weeks with gasoline demand that‘s surging because of all the evacuations out of south Louisiana and southern Alabama and Mississippi.  So, production of gasoline goes down.  Demand goes up.  Inventory is already low.  That creates a lot of pressure our gasoline.  And releasing a little oil from the strategic reserve is a nonevent.  It doesn‘t fix the problem.
MATTHEWS:  Jason, this seems to be making the president‘s case.  He‘s been saying—ever since we started arguing about energy policy several years ago, he‘s been saying the issue is refinery capacity has to be expanded. 
GRUMET:  I think that‘s certainly one of the issues, Chris, but it is just a small part of the overall global problem. 
We have good news, bad news and worse news.  The good news is, we are half as dependent upon oil for per our GDP that we were 20 years ago.  We have made a lot of progress.  The bad news is that the oil prices are high and are going to stay high for quite a while.  The worse news is that any little disruption, hurricane, labor strike, anxiety in Nigeria, any kind of terrorism in Saudi Arabia and we do not have the global reserves to address this problem.  You can‘t refine oil that you don‘t have.  U.S. demand is going up and up.
MATTHEWS:  Is there any other refinery capacity we could resort to in meantime while they repair what—the damage done down in Louisiana? 
GRUMET:  Refineries in this country are stressed.  And we need to do more to increase our refining capacity. 
MATTHEWS:  But there‘s no alternative refinery capacity?
GRUMET:  People are not sitting on spare capacity.  Refineries are going hard.
MATTHEWS:  David, do you buy that, that whatever is lost down there is lost?  There‘s no alternative to get it? 
PURSELL:  No, you‘re running your refinery system domestically this time of year at or near capacity.  There‘s just not a lot of spare—of spare hydrotreating capacity out there. 
MATTHEWS:  Let‘s all take a look at the average price of gas in Boston, $2.60, in Chicago, $2.78. 
In Houston, Texas, it‘s been at $2.56, L.A., $2.76, New York, $2.61.  Let‘s take a look around the world.  Rome is paying $5.70.  That‘s in U.S.  dollars, obviously, $5.70 per gallon.  London, it‘s $5.60 a gallon, Tokyo, $4.61, Moscow, $1.95.  They‘re a producing country.  Beijing, $1.71.  It‘s probably subsidized.  Lebanon is paying $2.64.  Riyadh, the ultimate producing state, 92 cents.  Kuwait, 68 percent.  Cairo, 59 cents.  That must be an interesting deal.  They don‘t produced any oil.  And Caracas, a highly subsidized socialist economy, 12 cents.
GRUMET:  Chris, this is the key point.  Oil costs the same around the world.  We have a global oil market.  The price of a barrel of oil in Saudi Arabia and the U.S. is the same. 
MATTHEWS:  Well, why are the pump prices so different?
GRUMET:  Taxes and subsidies.  Taxes and subsidies.  But, fundamentally, this is a global oil problem.  And until we address the global demand and supply disequity, we‘re going to have a problem for a long time to come. 
MATTHEWS:  Let me go to David.
You know, whenever you talk to an oil man, or I guess an oil woman, they always say, we got plenty of oil in the world.  We just have to get it.  They‘ll never run out of it.  You can‘t run out of oil.  And yet, recently, there was talk that—I know this sounds millennial, but—or apocryphal—that they may even have an overestimated capacity reserve in Saudi Arabia.  Instead of hundred of years, it is in a much more near-term end zone for us. 
Do you buy that, that we‘re getting close to running out of oil around the world? 
PURSELL:  No, I don‘t.  I think the issue has been, global demand growth is outpacing the ability to convert those reserves into producible oil. 
PURSELL:  I think the reserves are there and I just think it is going to take time and money and a lot of effort from the oil business to convert those reserves into actual production. 
GRUMET:  We‘re not running out of oil.  We may be running out of cheap oil.  I think we‘re out of $20 oil.  I think we‘re out of $30 oil.
MATTHEWS:  Well, we are going to feel the pressure point now, this week.
MATTHEWS:  More than ever, because we‘re going to realize what it means to lose this refinery capacity down in Louisiana. 
Anyway, thank you, David Pursell. 
Thank you, Jason Grumet.
GRUMET:  Thank you. 
PURSELL:  Thank you. 
MATTHEWS:  Up next, the impact of Hurricane Katrina on the environment.  We will talk to a scientist from Louisiana—from LSU, Louisiana State University Hurricane Center.
This is a special edition of HARDBALL on Hurricane Katrina.  We‘ll be right back.
MATTHEWS:  Coming up, oil, septic waste, maybe even dead crocodiles. 
What will be the impact of Hurricane Katrina on the environment?
HARDBALL‘s special edition will be right back.
MATTHEWS:  Welcome back.
Because New Orleans is a city below sea level, the floodwater must be pumped out of the city.  With the majority of the pumps now not operational, it will take a week or longer to remove the eight to nine feet of standing water now in the Big Easy.  The immediate problem is that this water is turning into a toxic soup as it mixes with sewage, gas, and other poisonous fluids. 
Ivor Van Heerden is with the LSU Hurricane Center.  He has an update on the phone for us from Baton Rouge. 
Ivor, thank you for joining us. 
You know, that phrase soup—it‘s been called gumbo.  It‘s the mixture of all the things that happen in that tea cup of a city of New Orleans.  How does it look for cleaning it up? 
IVOR VAN HEERDEN, LOUISIANA STATE UNIVERSITY HURRICANE CENTER:  Well, right now there‘s a report of a levee breaching along the industrial canal.  So, before you are going to be able to pump a lot of water out of some of these areas, this levee is going to have to be repaired. 
So, that initial estimate of a week may be being optimistic.  We may be looking at several weeks before we can get all the water out. 
MATTHEWS:  I understood that, as of yesterday, that these levees are 100 feet thick.  How could it break? 
VAN HEERDEN:  The situation is that the surge comes in from the east and it flows up a funnel between two levee systems.  So, as it flows towards New Orleans, the cross-sectional area gets narrower and narrower and narrower.  And that really amplifies the surge.  It finds its way over the levee.  There‘s some wave action and (INAUDIBLE) It erodes it out.  And then you have got this serious flooding we see right now. 
MATTHEWS:  OK, let us reset the table, as we say on television.  What is the situation of New Orleans just in terms of the topography, what it faces on its various sides, what—the fact that it is below sea level?  And what kind of liquids would be spilling into the city in the last several hours? 
VAN HEERDEN:  We are still trying to figure it out. 
But the hazardous—the damage assessment model suggests that 90 percent of all buildings were badly damaged, if not destroyed.  So, we have no idea what may or may not have leaked out of chemical plants, gas stations, aviation gas facilities and so on.  Tied to that is the fact the sewage plants have been flooded.  There‘s some graveyards that have been flooded.  So, you mix that up and you get that proverbial gumbo brew. 
MATTHEWS:  Very, very, very interesting and very sad. 
Anyway, thank you very much, Ivor Van Heerden, who is studying this matter for the weeks ahead, I‘m sure.
Coming up, a look ahead at disaster relief.  What is the American Red Cross doing to help those in need? 
We will be right back with a Red Cross official and also Senator Mary Landrieu of Louisiana.
MATTHEWS:  Welcome back.
Hurricane Katrina has now been downgraded to a tropical storm, but it is still moving through Louisiana, Mississippi and Alabama. 
Joe Becker is the senior vice president in charge of preparedness and response for the American Red Cross.
Joe, I was talking to Senator Trent Lott earlier in the program.  And I asked him about the prospect of bringing back that gang of Bill Clinton and George Bush Sr.  They raised so much money for the tsunami victims over in Asia.  Are we going to see that kind of effort to raise money at the highest level for this part of the country today in Louisiana, Mississippi and Alabama? 
JOE BECKER, AMERICAN RED CROSS:  I can tell you, this response is going to take a significant fund-raising effort.  If we look at what we did last fall, with those four hurricanes, our best guess at this point is that this is going to be even greater than the sum of those four. 
So, we have got a monumental task ahead of us, with the Red Cross and with the whole country in helping these people get back on their feet. 
MATTHEWS:  Talk about the role of the Red Cross, as opposed to other aid agencies?  What do you fellows and women specialize in when it comes to these disasters? 
BECKER:  Our role for the country is to provide people a safe place to stay, shelter people.  Our role is to feed people.  Our role is to meet their immediate emergency needs.  We do that for the country in the national response plan. 
What that means is, for the folks who have nowhere to stay, it is a high school gym; it is a high school a church basement.  It‘s whatever we can put people in over the next days to keep them out of harm‘s way.  And what it will mean over the next week, for particularly folks in New Orleans, is, it might be a place to stay for weeks and weeks, depending on how long it takes people to find another place to live. 
MATTHEWS:  Joe, we‘re looking at the Superdome right now.  And everything seems very calm there and disciplined.  And I have to say, a lot of brotherly love in that group, love in that group.  Everybody is calmly lying down in their spot and no disorder. 
What do those people face?  Are they going to get help from the Red Cross to move out of there and into other shelters? 
BECKER:  I would say don‘t let the calm exterior outline what‘s actually going on inside those people.  They have no idea what‘s left of their home.  They might have no idea what‘s left of their pets.  They might not know what‘s going on with their loved ones, with other family members.
That‘s what we will be doing over the coming days.  As they find another place to stay for a period of time or maybe they‘re able to go back home, we will help them put their lives back together again.  In the immediate time, for the next hours or days, we are going to just give them a safe place to stay and a few meals a day and make sure they‘re taken care of. 
MATTHEWS:  Is the Red Cross going to be the main agency helping these people or is it going to be FEMA? 
BECKER:  FEMA provides housing for people and, once they have found a place to live, then helps them recover.  We meet the immediate short-term emergency needs of these people. 
Now, having said that, we work with a lot of other partners in different communities, particularly the faith community, where we will work with them for meals or to use their facilities for shelters.  The Red Cross is the lead agency for that, but it takes all of America, particularly in something this big, to help these people. 
MATTHEWS:  OK, thank you very much, Joe.  Best of luck.  And we will be helping you as much as we can.  Thank you much, Joe Becker of the Red Cross. 
Democratic Senator Mary Landrieu of Louisiana joins us now by phone from Baton Rouge.
Senator, thank you for joining us. 
We have been watching these amazing scene from the Superdome.  We have been watching the water level rise as it did in New Orleans.  What can we expect to see from the federal government? 
SEN. MARY LANDRIEU (D), LOUISIANA:  Well, Chris, all federal assets are leaning forward, as we say, and are on the ground.  The FEMA director is here.  The Red Cross director, Marty Evans, who I spoke with earlier this morning, is inclined to come here.  Of course, her top people have been here for days getting ready. 
This was just a huge storm and quite devastating, as we‘re now seeing, Chris, the first pictures that are really coming over, as the helicopters and emergency personnel can really get out to the region to take the videos that will help us get a clear assessment. 
But, Chris, you are absolutely correct and also Joe Becker.  It is going to take us all to help make this recovery work.  I‘m evacuated to  Baton Rouge.  I‘m actually in a local hotel, just stood in line myself for 45 minutes to get served and to feed my children.  And people are being calmed.  But they‘re very, very concerned about their homes, how long they can stay.  Some elderly couple came up to me and said, truly, Senator Landrieu, would you please tell them we may have to stay an extra day or two? 
So, I‘m asking everyone.  I know the governor is directing this effort.  But everyone has got to do—think outside the box, make good decisions to help everybody get back on their feet. 
MATTHEWS:  Do you think you might be encouraging something like we saw with the tsunami disaster in Asia, where people like former President Bill Clinton and former President George Bush Sr. organize a massive program of raising money from the private sector? 
LANDRIEU:  Well, Chris, that would be very helpful.  I know the private sector stands ready to help. 
Of course, in America, we have and we‘re so blessed to have a strong system of governmental aid, very mature civil agencies and volunteer organizations, business labor organizations that are ready to stand up and help.  Unlike many countries that don‘t have a tradition of that, we do. 
Having said that, I‘m certain that the Red Cross could use some extra money.  The FEMA director said, don‘t send us money.  Send it to the Red Cross.  He told me that today.  The governors are directing the effort.  The local officials have literally put their lives on the line to keep people safe. 
Now we have got to figure out a way to get people back into their homes in a reasonable amount of time, get this electricity on and keep people fed and safe throughout the ordeal.  It is going to be a massive effort. 
MATTHEWS:  Well, I can—I can say one thing, Senator.  Everyone is watching.  I have never seen so much interest around here.  Everybody has been glued to the TV set, watching this here in Washington.
Thank you very much, Senator Landrieu.
MATTHEWS:  Join us again tomorrow night at 7:00 Eastern.  We will have more on the aftermath of Hurricane Katrina. 
Right now, it‘s time for “COUNTDOWN WITH KEITH OLBERMANN.”
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