Russert Watch: Gas Is Expensive, Oil Companies Are Greedy, Change Is Inevitable

Welcome to another Sunday, and our favorite way to wake up -- a full hour-long detailed discussion of the rising energy costs with six Very Smart White Men! Today Tim's got a Secretary of Energy Samuel Bodman; President and CEO of the American Petroleum Institute Red Cavaney; CNBC "Mad Money" host and generally excitable guy Jim Cramer; Senator Dick Durbin (D-IL), assistant Democratic Leader; and Daniel Yergin, author of "The Prize: The Epic Quest for Oil, Money & Power" and NBC energy analyst. Read all about 'em , before or after you read the transcript here and watch it again and again on a continuous loop here.

This entry is later in the day than usual but I've been doing double-duty on the Tribeca Film Festival; I will leave it to you divine which is more fun to watch, a solid hour of Tim and five panelists discussing the issue of supply and demand for oil or movies with titles like "I Want Someone To Eat Cheese With."

But on to the fun! This MTP is less contentious a subject than Tim's usual fare (well, apart from the fact that Secretary Bodman and oil company apologist Red Cavaney had their work cut out for them in explaining away the status quo) and you can actually see that in his fashion choices today. I will say it: Tim looks goooood. His usual white shirt-boring tie combo was replaced with a rather snappy-looking powder-blue shirt and burgundy tie -- and the hair is at that overdue-for-a-cut phase that had a hint of a devil-may-care tousle without veering dangerously into mullet territory. For those of you who scoff at sartorial assessments I point out that the whole effect was to soften Tim and make him look less stiff. In light of his comments earlier this week about how he is aware of MTP criticism and does try to respond accordingly, I do tend to think this observation is meaningful. Nothing happens by accident on TV.

Tim is ready with today's show with stats, articles and vid clips -- more than usual it seems, perhaps because he and the show's producers know that this is going to be a pretty dry show. Important, true, but dry nonetheless. He opens dramatically, with the assertion that for 45% of Americans, the cost of gas is their number-one concern, more than Iran's nuclear capability (33%) and the immigration imbroglio (26%). Who do they blame? The oil companies take it, with 37%, followed by oil-producing nations (22%) and President Bush (15%). Upshot: there's panic at the pump, and Americans want to know who's gonna fix it. Big Oil, they're lookin' at you (and Bush administration, they're lookin' at you not really lookin' at Big Oil).

Bodman says that oil prices are high because demand exceeds supply, explaining that there's more demand than there is supply (no, really, he does that). To be fair, he also notes that "we're getting people out of poverty and living better" but that meant more people to consume more oil. He also points to the shift from winter to summer -- extraordinary! inconceivable! unprecedented! -- and the shift from MTBE to ethanol and to ultra low-sulphur diesel fuels.

Tim asks if maybe the oil companies are, you know, exploiting this situation? Bodman says that of course they're looking into it but they see no evidence. Oh, reeeaaaaallly? says Durbin, who notes that last year the oil companies made $110 billion in profit, with ExxonMobil out in front: "That translates into $1,000 for every household in America paid for profits by these oil companies." Yowch, especially when you consider the thoughtful parting gift given to retiring Exxon CEO Lee Raymond -- a $400 million send-off. (Keep in mind that for most jobs, it's a treat to be sent off with cake at 4pm in the conference room). I mean, even Drudge had that. Durbin is also appalled by our energy policy: what energy policy? Precisely. Gas prices have almost doubled and new-fuel-crossover kinks were predictable, "and yet we didn't prepare ourselves." But when he says "we" he really means "the Bush administration."

Aha! Says Tim. But YOU voted for ethanol to be blended with gasoline, aren't you partly to blame? Aha back! Says Durbin. And I'd vote for it again! We need to become self-sufficient, like Brazil. Ethanol production is our chance at that.

Tim turns to Jim Cramer and puts it to him: You said that you don't think we're ready for ethanol in this country. Explain yourself, SIR! Cramer does: "I think that 50 to 60 cents of the increase is because we had a bottleneck that should've been perceived and should've been dealt with well ahead. I think the Energy Department should've known that. I think the Energy Department should have warned us that this was going to happen."

This pushes Broder over the edge: "Oh yeah? C'mere and say that, punk! I eat two-bit pundits like you for breakfast!" Actually, he doesn't say that. But did I mention that this edition was dry? Right. Bodman protests that ethanol is easy to blend with gasoline -- the problem is in distributing it. Gigantic cross-country networks of transportation to giant metropolitan areas don't just invent themselves, you know. If there was any room for debate on this point, we didn't get to it; Cramer didn't follow up and neither did Tim. Which I guess gives the point to Bodman by default.

For my money, the guy talkin' the most sense is Daniel Yergin, who takes it global and notes that, transportation network or not, the US actually import 60% of its oil, and we're not alone in feeling the pinch: "We are seeing a slow-motion energy shock spreading across the world." Between hurricane-hit production and shortfalls from the rest of the planet "we're missing over two million barrels a day in a very tight market." And, hello, Iran tensions.

You would think that Tim would explore these statements -- Yergin mentioned Nigeria, Venezuela, Iraq, Iran, and the fallout from hurricanes. Lotta meat there, no? Yes, well, you know how to Google. Tim moves on to Red Cavaney because dammit, the American Petroleum Institute has feelings too, best expressed as "we're not doing anything wrong -- 30 investigations over the last few decades prove it!"

Well, says Tim, 'splain this from the AP:

"ExxonMobil Corp., the world's largest oil company, reported Thursday the fifth highest quarterly profit for any public company in history, posting gains from higher oil prices that were likely to stroke the furor over outsized oil company earnings. ... In January, Exxon posted the highest quarterly profits of any public company in history: $10.71 billion for the fourth quarter of 2005 and $36.13 billion for the full year."

This is the thing: Cavaney can hem and haw all he wants, but the fact remains that the oil companies are making out like bandits, and the Bush administration is letting them. More in the transcript to buttress that but specifically this: Cavaney points out -- proudly -- that the oil corps. earned 8.5 cents profits per dollar last year, not far off the the all-industry pan-economy average of 7.7 cents. That immediately struck me as actually a pretty significant premium, considering the massive output -- I mean, the oil companies sell more dollars than a lot of other industries. But Cavaney is on message (for those who read the New York Times, that message is conveniently set out in a full-page ad on which mentions that very 8.5-cent statistic in the context of "Where does your gasoline dollar go?" with a big dollar sliced up in to chunks: 55% crude oil, 26% refining, distribution and service stations, and 19% taxes).

Durbin calls B.S. on Cavaney: you call these average profits? You call Lee Raymond's gift an average gift? He comes very close to telling Cavaney to talk to the hand.

Here's my favorite part though: Tim's economics lesson. Now to be honest I think Tim did a good job of examining the issue -a full hour, lots of questions, he was very prepared, and he didn't let the oil guy or the admin guy off the hook. But this was too cute to not include -- it reads like an Abbott & Costello "Who's On First?" routine:

RUSSERT: Mr. Secretary, if, if demand is up but supply is down, why are the profits so high?

BODMAN: For that reason.

RUSSERT: No, think about that.

BODMAN: You know?

RUSSERT: Play it out.

BODMAN: Demand is up.

RUSSERT: Correct.

BODMAN: Right?

RUSSERT: Right.

BODMAN: So you've got more demand, you're going to force price up.

Now that, ladies and gentlemen, is comedy gold.

• Cavaney made the point that the oil companies don't want to put their employees in danger, so work in places like Iraq has fallen off, ergo less supply. Tim zeroes in here, reminding Bodman about how Wolfowitz said that the Iraq war would be paid for with oil money (right after the U.S. was greeted as liberators). Er, oops.