MR. CRAMER: Valero was able to buy its largest competitor; the government looked the other way. Valero is running its refineries, though, 105 percent of the time. They’re ‘round the clock. We have 100--we have 140 refineries in this country; we had 350 refineries 20 years ago. We have a huge refinery problem, and you can’t build them. And it’s not a federal government issue. It’s a local government issue because no one wants a refinery next to them.

MR. RUSSERT: So what we have is lack of refining capability...

MR. CRAMER: Right.

MR. RUSSERT: ...an increased worldwide demand, ethanol being added and blended in...

MR. CRAMER: Without preparation.

MR. RUSSERT: ...and do you believe the oil companies have been adding on a little bit extra profit?

MR. CRAMER: I, I think if they could drill they would drill. If they could refine more, they would. These are companies that are run for the shareholders, but they’re run to be able to produce as much oil as we can possibly use. They want to do that. Lee Raymond, he, he generated $67 billion in profits for his shareholders. I think that that’s a reasonable return, $144,000 a day. Katie Couric makes $85,000 a day. What value has she created vs. 67 billion by Lee Raymond?

MR. RUSSERT: Well, to the “Today” show and to the millions of viewers?

DR. YERGIN: Greenlighted to our morning...

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MR. RUSSERT: You leave Katie alone. At least till the end of May.

MR. CRAMER: She plays for another team now, so...

MR. RUSSERT: Senator Durbin?

SEN. DURBIN: Am I the only one of your guests here that think that profit taking is a problem? I mean, I understand the basic laws of supply and demand. I understand that if the input costs have gone up, it’s going to reduce your, your profitability. But here we have the most enormous profits in the history of the United States of America in business. The equivalent of $1,000 per household in America for profits. All of the market factors you described may suggest that the product is going to be more expensive to sell, but they don’t forgive what I think is an outrageous profit taking by this industry.

And let me also say to Mr. Cavaney, to suggest that these are average, average profits—they’re the largest profits in the history of American business. And to suggest that Mr. Lee Raymond’s retirement gift is an average gift of $400 million for his service to the company? That’s $3 for every household in America that they paid for Mr. Raymond’s going-away gift.

MR. RUSSERT: Do you have any evidence of collusion or gouging?

SEN. DURBIN: Here’s the problem we run into. Look, let me go back to an earlier point. For the past several decades, as we’ve just heard here from Mr. Cramer, there’s been a consolidation of this industry. There are now five majors. They have swallowed up all of the competition, and they’re the five big players. The Department of Justice antitrust division has watched as thousands of these mergers have taken place, with hardly a whimper. And now we have a situation where they are in control. Competition has lessened in terms of our own domestic oil industry, our own domestic energy. And I think that is a fact, too.

Is there collusion? Not until we have an aggressive investigation. And I might also add that when we suggested—the Democrats suggested in Congress making price gouging a federal crime, it was opposed by the Republicans. We think that this has to be taken very seriously if consumers are going to be protected.

MR. RUSSERT: Mr. Yergin:

DR. YERGIN: I think I’m in the “yes, but” role here. We’re back in this island of what we have to look at is what’s happening in the rest of the world. The American oil companies only produce—they produce less than 10 percent of the total world oil. That most of it is produced by state-owned companies. So what happens in terms of future supplies has a lot to do with what President Chavez of Venezuela decides to do in terms of investment.

And when we look at refining, refining went down because we had a lot of these tea kettle refineries that were created for—under a system of price controls. But I was looking at the numbers yesterday. The refining capacity, which is what really counts, not the number of refineries, is up about 15 percent in the last 12 years. So it’s as though we’ve built eight or nine new refineries but they’re not at greenfield, they’re on existing sites because that’s the only place you can do it.

MR. RUSSERT: Another Republican suggestion, this one from Arlen Specter, the chairman of the Judiciary Committee, and I’ll read it for everyone here on the screen. “Republican Senator Arlen Specter said the U.S. Congress should consider taxing the ‘Windfall profits’ reaped by oil companies as a result of surging crude oil prices.

Specter, and other lawmakers are responding to what they say is rising voter anger over gasoline prices.”

Mr. Secretary, should the government have a windfall profits tax on the oil companies and target that money for exploration of alternative fuels?

MR. BODMAN: First of all, this administration is doing everything that it can do to deal with both short and long-term issues related to the energy situation. That’s point one. Point two: There are certain things we know that don’t work and windfall profits tax is one of them. That was tried 30 years ago, it did not work. It resulted in reduced production. We have—you know, we have prima facie evidence of that. And to me, that proposal does not hold water.

MR. RUSSERT: What do you think?

MR. CRAMER: It doesn’t create any more oil, it just doesn’t. Nor does the $100 rebate create more oil, nor does a hydrogen program we’ve spent to create more oil. We’re a carbon-based economy, Tim. We got to create more oil.

MR. CAVANEY: The last time was tried that windfall profits tax we lost $1.6 billion barrels which was then had to be imported and almost one-third of the total work force of the industry left.

DR. YERGIN: I’d like to see the focus on investment. When you look at what’s required, something like $17 trillion of investment around the world for energy in the next 25 years, that’s where I think the money needs to go.

CONTINUED

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