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Oil Prices Surge; GM Makes $4.7 Billion Profit in 2010

Aired February 24, 2011 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: A stark warning, $220 a barrel is a real possibility.

Tonight, we have more cars than a dealership. You'll be hearing from General Motors, Ford, and Lotus.

Also, growing in size and confidence, Interpol tells me, it is just the beginning.

I'm Richard Quest. I mean business.

Good evening.

The surge in oil prices shows no sign of slowing. And tonight we ask how much is too much? There will come a point when the cost of oil leaves economic recover in tatters. I'll show you exactly what I mean if you join me in the library.

Let's begin with Brent, which, Brent and NYMEX at new two and a half year highs; Brent is pushing $119 in the early part of trade. It has since fallen back, as you see, at $114.46. Still a gain of $2.28. NYMEX hovers around $100 a barrel. The fear is that the-at these prices, recovery in industries such as airlines, automakers, transportation costs, even construction. Any thing that is heavily energy usage will take an affect.

International Energy Agency says a $10 rise in the oil price translate into half a percentage point annual decline in GDP. So that is the scenario. And this shows you what is actually happening. If you look at the oil companies, E-N-I, ENI, the Italian company, says Libyan oil output down 7 percent, the highest estimate so far, in suspended operations, along with other ones, Wintershall, owned by BASF, OMV, and Total, of France. All of these oil companies have reduced or suspended or are planning even greater suspensions. Now, remember Italy is Libya's largest energy, receiver from oil.

The worst-case scenario, now this is what people have been talking about today. The analysts at Nomura, who says, that if Libya and Algeria were both to cease production, in a violent fashion, then oil could hit $220 a barrel. It would be more than an all-time high. It would be $80 odd, or $60 towards an all-time high. But it really does depend on a total production calamity. The previous peak was back in 2008 and that was $147 a barrel. This is not the first time we've seen oil shocks. By and large it is geopolitical crisis and risks that make this so volatile.

According to BP crude oil costs just $10 a barrel in today's money, back in 1970. We've made the adjustment for you. Now, that had shot up to about $96 a barrel, by the end of that decade. That is roughly the time of the Iranian revolution. Price controls in the 1980s and other issues, took it down again to $40. That is seen in many ways as being a calamity from OPEC, which it was a collapse in price and it absolutely clobbered their revenues.

Fast-forward to 2003, and you see you are up to $98 a barrel. Just roughly at the time of the Gulf War. So what we are seeing now is an oil shock and it is based on speculation. But how much damage will these sort of prices do to global economic growth?

Joining me now is Jorge Decressin, the chief economist a the World Economic Outlook at the IMF.

Jorge, let's be blunt. At $100, $120, $130 a barrel, how much damage happens to the global economy?

JORGE DECRESSIN, IMF WORLD ECONOMIC OUTLOOK STUDIES: Richard, I think what is important to bear in mind is high oil prices do not necessarily entail damage to the global economy. Much of the high oil price that you are seeing today is actually a reflection of very strong global activity that has boosted the demand for oil. And the fact that it becomes gradually more expensive to get oil out of the ground. I mean, the reason prices are so high are largely fast growth in many emerging economies.

QUEST: Right. But-

DECRESSIN: If you go back-

QUEST: Hang on, hang on, the general thinking is that OPEC is high-is relatively content with a price somewhere between $75 and $90, $95, the reference rate. If we start seeing oil at $120 for Brent, heading towards $150, then you must be concerned about that effect.

DECRESSIN: OK, Richard, let me try and explain this. When we were back in April of 2010, so about one year ago, markets were expecting prices in 2011 to average around $83 per barrel. And that is if you take an average across various sorts of oil. Now, in January, of this year that expectation had been raised to $90 per barrel. And the main reason for that increase was that the global recovery had evolved better than expected. There was no longer a fear of a double-dip in the U.S. economy, for example.

So, now we have gone beyond that. You are right, we have gone beyond $90 per barrel. And it has happened over the last month in response to concerns this time about supply, about oil supply, especially from North Africa. So we are no longer now in a situation where we are not dealing with high oil prices because of high demand, but because of low supply. And that is a concern for growth. Now, how big a concern it is, is still very much up in the air. Other producers such as, for example, Saudi Arabia have announced that they stand ready-

QUEST: Right.

DECRESSIN: -to tap their spare capacity to make up for production that is being disrupted in North Africa.

QUEST: OK. Now, if we then factor into this the inflationary effects. We have already got countries like the U.K. Mervyn King, in his statement says, basically, it is high oil prices and commodity prices that has lead to a lot of inflation. Surely, we do need, even if it is not a crisis, by any means, we do need to keep an eye on the inflationary pass through on the price of oil.

DECRESSIN: Absolutely right. I think this is, you are dead on there. It is important, particularly, however for emerging and developing economies. In advanced economies we have handled higher oil prices pretty well, in most of them. And you can see that back in 2007, for example, when oil prices were very high and where activity in advanced economies was booming. Yet inflation was still under control. Now where we have bigger concerns is in many emerging and developing economies, where central banks have less credibility, where they are still newer and where people expectations are therefore not as anchored as they are in advanced economies. And those policy makers will have to watch out for this very carefully.

I should add, though, that actually the bigger concern in many of these economies is the impact that high prices might have on the budget, because some of these countries are subsidizing oil.

QUEST: Right.

DECRESSIN: And if they are not doing so then some people could be in trouble, so it is also a social issue there.

QUEST: A final brief question (UNINTELLIGIBLE). We are pretty much in some of the most difficult economic times that we have ever seen, aren't we? In the sense of the policy issues available and the solutions available?

DECRESSIN: Yes. There I agree. Times are very difficult. But they are much better now than they were one year or two years ago, that you will have to agree. But you are right, we are facing large fiscal deficits in many economies that will have to be rolled back. And this will be painful.

QUEST: We'll leave it there. Jorge, many thanks, indeed, for joining us from the IMF. Always lovely to see you. And thank you very much for coming on QUEST MEANS BUSINESS tonight.

Jorge was just talking, there, about the potential for OPEC countries, like Saudi Arabia, to pick up the slack for what might be lost in Libya. Earlier, I asked MARKETPLACE MIDDLE EAST's John Defterios, who joined me from Abu Dhabi, whether flooding the market was the only way to bring down prices?


JOHN DEFTERIOS, CNN ANCHOR, MIDDLE EAST MARKETPLACE: They are not going to flood the market right away. In fact, you heard from the Saudi oil minister, Ali Al-Naimi (ph), saying we have spare capacity right now within OPEC at 5 million barrels a day. But they'll only open the taps if the demand is there. Despite the spike in prices right now, Richard, the inventories are still very high, especially in the United States. So they don't think they need to put more oil onto the market. I think what the market is responding to is the security risks; not in Libya only, not just in Algeria, and what we've seen in Egypt. But what happens in the Straits of Hormuz, eventually, what happens across the Gulf, from Iran, Bahrain, Saudi Arabia, that is what the market is worried about.

QUEST: So it is classically tensions and speculation on the back of that. If that is the case, John, and if there is some sort of-to use the old cliche, peace breaks out, then, they will be expecting, in OPEC, the price to fall back?

DEFTERIOS: That is certainly the case. And I think that is why Saudi Arabia, one of the oil officials there, an unnamed source, said today, trying to hint to the markets, look, we are prepared to move, if necessary. We don't think it is the time right now. Some of the analysts I spoke to said that maybe $10 to $20 a barrel is priced in because of the security risks. And because we don't know what eventually could-could happen in Saudi Arabia.

QUEST: But then oil ministers and business leaders in the region, how concerned are they? Because they obviously have greater insight, if you like, into the spill over effects.

DEFTERIOS: I would say they like to have this magic number, Richard, between $80 and $90 a barrel, the so-called Goldilocks scenario. Not too high, not too low; something quite in between. And that is kind of the new normal right now. So they would like to bring it below $100 a barrel. Because they are very concerned that these price levels right now, with a floor of $100 going to $120 a barrel, for around North Sea Brent, is going to undermine the economic recovery and they don't want the finger pointed to them, because we slowed down growth because of high oil prices. So ready to move if necessary. I'm sure they would like to see this play out in the next two to three weeks. And if necessary, like Saudi Arabia did in the second half of 2008, put more oil on the market. But then, as you saw then, prices collapsed, they don't want to see a price collapse yet again.


QUEST: John Defterios joining me from Abu Dhabi. Oil, our top story, and it is on the mind of prominent people who have been Tweeting on Twitter. We sorted through the clutter and there is a lot of it on Twitter. We found the most insightful messages from some of the big thinkers and movers and shakers.

Tony Fernandez, for example, is the chief exec of Air Asia, was on this program last week. He said, he Tweeted, "Results today for Air Asia. Also very important board of directors meeting." That much I'm sure about. But look, "Shame oil price will knock shine off."

I'm sure he's talking about those results.

The next Tweet from Christiana Figueres, the executive secretary of the U.N. Framework on Climate Change; she Tweeted today, "In addition to tragic humanitarian situation, Libya crisis pushes oil above $100." We know that, but this is the bit. "Another good reason for the world to rapidly to go green."

If all that was a bit too much for your digestion, a digression, Arianna Huffington, now of course, in charge of publishing at AOL. You can always rely on Arianna to come up with a good saying. Here's what she says: "Don't let perfect become the enemy of the good. Fall short of your goal? Get right back to your sleep schedule-without guilt. Good night."

Right, that is Arianna's view from "Tweets From The Top". And we have, of course, a variety of Tweets, where you can follow on. They are, I'll give you the address,, and of course, you can follow us on Twitter,

Coming up we are talking strategy. Ford marketing chief tells us about the car giant's new campaign. That seems to be one ad being played across all its markets. And we'll speak to the chief financial officer of GM about his company's rise from the ashes.


QUEST: General Motors have turned the corner, so it seems. America's largest automaker made a $4.7 billion profit in 2010. It put an end to five straight years of losses. Poppy Harlow was talking to the chief financial officer of GM. Poppy joins me from New York.

Come on, Poppy, did they really make good money by selling cars, or are we witnessing a bit of financial finagling, because their cost base is down, because of bankruptcy?

POPPY HARLOW, CNN BUSINESS CORRESPONDENT: That is the perfect question. It is sort of an amalgamation of both Richard. Yes, they are doing better, they are selling more cars here in the U.S. They are doing extremely well in China. They sell more cars there, now, than they do in the U.S. So that is their number one market at this point. And as you'll hear in a moment, from the chief financial officer, they have broad plans for expanding in a very big way in China.

At the same time you can credit cost cutting and going through the bankruptcy, being able to restructure a lot for this number, the $4.7 billion annual profit, from General Motors. I want you to take a quick listen to part of my conversation with the CFO, first talking about how they go to this profit, then we move on to the importance of China. Take a listen.


CHRIS LIDDELL, CFO, GENERAL MOTORS: Well, it is a number of factors and it is the things we talked about, in particular, at the IPO. First and foremost, obviously better vehicles. So we are selling a much better vehicle now than we were a few years ago. And so we are getting great demand for that. Secondly, though, is costs, you know, we have obviously lowered our costs. I talked a lot about lowering our costs to break even at the bottom of the cycle. And so, we are seeing our ability to make profits even at a low point in the cycle, like last year. And I guess, third, I'd add the balance sheets. So we restructure the balance sheet. Made a lot of progress there and that is helping us as well.

HARLOW: Taking a look at China. Obviously, a lot of strength in China helped out these numbers in a major way. You are selling more cars there now than you are in the United States. But what we're seeing the Chinese government do is attempt to have a soft landing here, from growth that, you know, 10 percent, they are pulling back. They are trying to reign in inflation. What are you preparing for that to do to your sales in China? Will it have an impact?

LIDDELL: Well, again, I think you have to look at the context of long term and then you will see short term volatility around the long-term trend. China is still incredibly low penetrations in terms of vehicles per person. It is really just ramping up. So it might be the biggest vehicle market in the world, but remember they have four times the number of people we have and only roughly the same number of vehicle sales. So there is still a lot of long-term potential in terms of growth in China. What you will see is volatility around that long-term. Our view, is it will grow modestly this year. It won't grow exponentially. But we're still expecting it to be a pretty good year in China this year.


QUEST: That is the chief financial officer of GM talking to Poppy Harlow. Let us continue to look at the range of issues relating to cars. GM is making good money. Ford, which didn't take bailout cash, has made excellent results in recent times. Has shifted its policy on advertising strategy. GM (sic) is going to get global. The word out there is about its redesign of the 2012 Ford Focus. Now it is a big switch from traditional advertising campaigns that rely on unique commercials for individual markets. The new TV ads are all around the idea of the new Ford Focus, roll out across North America and Europe, starting next month. The advertising giant, WPP, own by Sir Martin Sorrell, or run by Sir Martin Sorrell, is behind this new campaign for the Ford Focus.

So, why should Ford make this quite revolutionary decision to have a single campaign with the same ads, in different countries? A short time ago I spoke to WPP's Sir Martin Sorrell, and to the Ford marketing chief Jim Farley, who both joined me from New York. I wanted to know what was so wrong with doing adverts individually, for different countries, like we used to.

JIM FARLEY, VICE PRESIDENT, MARKETING, FORD GROUP: Last time we launched a focus we had eight different advertising campaigns, which is great, but now, we have one car. In the past we had two or three different focuses around the world. Now we have one car. So the excuse of doing different campaigns just because the car is different is gone. The fact of the matter is, the new Focus and how it is different is really centered around technology. And what people care about in terms of technology is not that different around the world. So, since we are selling technology the approach of being consistent is more appealing.

QUEST: Martin, for years, agencies that you own and others, have convinced clients that you need different campaigns. It has been the raison d'etre for half the bills that you send out.

SIR MARTIN SORRELL, CEO, WPP: A little bit inaccurate, Richard. I mean over the years we have done both. I mean, those famous globalization articles that were written in the "Harvard Business Review" in the early `80s-when I was at Sarchies (ph) actually-what talked about a globalizing consumer, a consumer that was being more interesting for their similarities rather than their differences. So it is a little bit unfair that there have been campaigns for both.

What we are doing with Ford, and it is because they have such a strong vision, a strong CEO in Alan Mullaly, and a very strong CMO with Jim, and his colleagues like Alana (ph) Ford, and others, inside the operation. What we are trying to do is to give them access to all the talents that we have around the world that are relevant to what they have to do, either at a global level, or at a regional, local level. I mean, this is one launch, this is the Focus launch we're talking about today. There will be others. Some will be more locally focused, some will be global, as we have seen today.


SORRELL: One thing I want to dispel, Richard, what we are trying to do is to make this the highest common multiple. Not the lowest common denominator. We're not trying to make it cheaper, what we are trying to do is to make it more effective and better. And give Ford access to all the talent that we have.

QUEST: Right, now if there is cultural sameness that can be drawn upon, because the globalization campaigns you talked about, were very much of a different genre. They were not so product related. They were not so individually attached to a specific vehicle, or a specific soap powder. So, if-can we say there has been a shift, Martin, in the-because of globalization that makes this possible?

SORRELL: Well, Jim can answer that in the context of Ford. I just made the comment that the platform for Focus is technology. And all the 15-second ads which are part of the TV campaign, but it goes way beyond that, to social media. And in fact, it has been going for a considerable period of time before the official launch on March 1. But al the ads are based on technology. And the car is king in this. I mean, the product is the centerpiece. And technology is the driver here.

QUEST: Is this something, Jim, you would look to expand within the Ford brand?

FARLEY: I think as Sir Martin said, the most important part of the focus launch was getting across the fact that it is a car that can park itself. It is a car you can talk to. It is a car where the engine stops at the stoplight, and restarts. All of these technologies are, frankly, independent of where they are used. And people are really excited about that. And as Ford is betting on technology to differentiate ourselves on all our products, like a new global Ranger, it doesn't matter which product it is, it is our bet. We certainly will see us embrace social media to pre-sell that technology and come to market and explain it in a way that is consistent.


QUEST: That is Jim Farley of Ford, the chief marketing officer, and he is joined by Sir Martin Sorrell, of WPP.

The Formula One season is already off to a false start, you'll know about that because of events in Bahrain. It is a logistical nightmare for the teams, we will show you after the break, how they are getting moving again. QUEST MEANS BUSINESS.



QUEST: It's been a difficult week for Formula One, following the arrests in Bahrain, the Kingdom's crown prince called off the season opener race. It has left the 12 teams with a big hole in their pockets. One estimates suggests $100 million could be lost by this event. Aside from the money the teams now have preferred to sidestep (ph) the political debate. CNN's Don Riddell discovered that at Team Lotus some feel the postponement could actually be a blessing in disguise.


DON RIDDELL, CNN INTERNATIONAL CORRESPONDENT (on camera): This is the Team Lotus factory in England. It is far removed from the turbulent events on the streets of Bahrain, but the product being manufactured here became a factor in the dispute between the kingdom's government and the Bahraini people. F1 was in the middle of a political crisis.

(Voice over): From a sporting perspective the immediate concern has now passed, this week Bahrain withdrew from hosting the first race and the 12 F1 teams now have an extra two weeks to prepared for the start of the season.

MIKE GASCOYNE, CHIEF TECHNICAL OFFICER, TEAM LOTUS: Time at this time of year is always very valuable because we are struggling to get enough parts, and to the first race, and updated parts, so two weeks are always a great help for us. We had a slight off with the Yanno (ph), truly, in Barcelona, and broke a few bits, so some extra time to make and replace them is always worthwhile.

Obviously a great shame that the race wasn't able to happen. And we hope, obviously, later in the year that it may be able to.

RIDDELL: That is a practical response from a sport for which a season's racing is a global logistical challenge. For a factory employing some 240 staff, this is one of the busiest times of the year in F1 and they haven't even started racing yet. Mike Gascoyne doesn't expect to revised diary to cause to many problems, but he doesn't know if is team will be racing in Bahrain at all this season.

GASCOYNE: To be honest that is up to the authorities and obviously it is very important for the country that they put things right there. And that is the main priority. We're racers, we'll go racing wherever around the world when the time is right.

RIDDELL: If a race cannot be staged in Bahrain this year then that could leave sponsors and broadcasters feeling shortchanged. But Team Lotus still think there will sufficient value for money.

GASCOYNE: I think it is a very long season and the exposure of Formula One, the TV audience is massive. Missing one race, I don't think will have that large implication. For us as racers, we like to be out there racing; 20 races is probably the limit that we can really achieve throughout the year. So one less makes it a little bit easier, but I'm sure the race will come back on the calendar for next year.

RIDDELL: It remains to be seen how much of an impact the Bahrain issue will have on Formula One. What's more certain is that when racing does finally start this has the potential to be one of the most exciting seasons ever. Don Riddell, CNN, Team Lotus Country, In the North of England.


QUEST: And the first race, of course, will be later in March. It will be in Melbourne. And the last race will be in Brazil later in the year.

Now, they operate in secret, not Formula One. No, this is another organization. Maybe nearly as big. They use global networks and they're raking in ever growing profits. How to fight the rising power of transnational organized crime. It's the final part of our series, Inside Interpol. And we look the future next.


QUEST: Hello. I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN. And on this network, the news always comes first.

Switzerland is freezing Moammar Gadhafi's assets. It's part of an international backlash against the Libyan leader for his violent campaign against anti-government demonstrators. The White House says President Obama is speaking to British prime minister and the French president later today and they'll coordinate actions in Libya.

Police say a Saudi man in the U.S. state of Texas was planning to bomb targets, including the house of former President George W. Bush. They've arrested the Saudi man and charged him with attempted use of a weapon of mass destruction. Police say the 20-year-old was in the U.S. on a student visa.

At least 98 people are now confirmed dead from Tuesday's earthquake in New Zealand. Officials told TV New Zealand no one was rescued alive overnight and they say there are grave concerns for the hundreds of people still missing. Search and rescue operations continue, nonetheless.

And at the Kennedy Space Center in Florida, the Space Shuttle Discovery is being prepared for its 39th and final journey. The goal of the 11 day mission is to deliver parts and equipment to the International Space Station. The launch is expected to get underway in less than 90 minutes from now.

The year was 1924 and one of the first ever general assemblies for the international policing organization. That organization would, in our day, become known as

Fast forward to today and things are very different at the headquarters in Lyon. 9/11, the growth of transnational organized crime -- it's all changed the way Interpol fights crime. Apparently, there's no going back. You'll know we've been given rare access and a chance to film inside this organization.

Over the week, we've looked at what shaped its growth over the decades, the challenges in how it operates.

Tonight, in the final part of our series, we look at the future inside Interpol.


QUEST (voice-over): Bigger, faster, better funded -- the three pillars of Interpol's future as seen through the eyes of its secretary general.

Ron Noble is 10 years into the job and big changes have already been made. Even bigger ones lie ahead.

(on camera): If you accept that it is now 20 to six in the morning...


QUEST: -- in -- in the East Coast...

NOBLE: Right.

QUEST: -- and 20 to six in the evening in Tokyo...

NOBLE: Right.

QUEST: -- or Hong Kong, if they're exchanging information and they need to talk to somebody from Interpol, will they be doing it through the national central things or would there be somebody telephoning here?

NOBLE: Through both. Through the national center of bureaus and through our command center, which is right over there, if they need any urgent assistance.

And our goal in the future is we have offices now in seven countries. We're going to have a command and coordination center in Buenos Aires and also in Singapore.

QUEST (voice-over): Noble can't run a global policing operation just out of Lyon alone. He needs another global base and Singapore will be a significant step to the future.

NOBLE: We go where the crime is. And we, as a world community, recognize that South Asia and Asia is an area of growing importance, both for legal activity and illegal activity. And Singapore provides us with an opportunity to focus on cyber crime in a way that we can't focus on here.

QUEST: Cyber crime is fast becoming one of Interpol's most pressing challenges. And Ron Noble is the first to admit Interpol hasn't come close to cracking it.

NOBLE: It's out of control and it's going to get more out of control unless we become more focused on our efforts. So we have cases, cases where we can take down Organized Crime Group A, Organized Crime Group B, Organized Crime Group C. The problem with this kind of crime, it's so -- so easy to get involved in it. It's so easy to get into it, a young, smart hacker in Country A can hack your account or my account.

But the problem for us is really the transnational organized crime groups that do this on a regular basis all over the world.

QUEST: To tackle something that is becoming a threat virtually everywhere, Noble needs to expand Interpol's databanks and revolutionize the way it supports its member countries.

But should we be worried about Interpol getting bigger and perhaps more intrusive?

NOBLE: Interpol never enters a country to enforce the law. Interpol relies on police from that country. And, secondly, here's what I say to your viewers. During Thanksgiving time in the U.S., there was a huge debate about whether or not people should go through a body scanner or refuse to go through a body scanner and be searched in what some say is an invasive means.

I say to these people, what about the people coming from another country entering the US?

Do you want their passports consulted or not?

Do you want their passports screened against Interpol's database or not?

And I would say to you that 99.9 percent of your viewers would say yes, and we expect it's happening and should continue to happen.

QUEST: Interpol is starting a new phase in its life. As an organization, it's growing both in size and in confidence. So are the criminal groups it's fighting against.

(on camera): When you telephone, do people take your call?

Are you -- have you -- has Interpol reached a level upon which people will say, oh, it's the secretary general of Interpol?

NOBLE: When I call people, it's usually because a serious crime has occurred in their country or might occur in their country. So people take my calls and take the calls of my colleagues.

QUEST: Ron Noble is entering his third and probably last term of office. He now has the air of a man who is bolder and more brash, as he seeks a greater role for this network. Here, the view is it's time to wake up to Interpol's full potential in the fight for global justice.

Richard Quest, CNN, at the Interpol headquarters, Lyon, France.


QUEST: And so our journey inside Interpol draws to a close. You've seen the high points, the key challenges and the work that still needs to be done if this needs and this organization will continue to be at the front role of international crime fighting.

If you missed any part of the four parts, you can watch them online, at You can join our Facebook page, and have your views on whether you think Interpol is a sleeping giant or watching what we need to be watching.

Now, the U.S. market -- a few moments ago, it was off nearly 100 points. But the market has pulled off quite nicely and we're now down just off 44 points. So it suggests that there's something of a recovery. But we are, of course, at an hour and 20 from the close. But as I say, we are well off the -- the lows of the session.

Pretty much the same story in Europe, where the losing streak continues across the board. And in Europe, let me put this into perspective for you. In Europe, we've had five straight days of decline. The DAX down almost 1 percent. Porsche was off nearly 10.5 percent on rumors that its deal with Volkswagen may fall by the wayside. So both shares there felt the brunt of that.

But five days of lis -- of losses and markets are now back to sort of areas at the end of last year.

We are two hours away, 90 minutes, to be precise, from a little piece of history -- the last ever launch of the Space Shuttle Discovery. In Cape Canaveral, that's where we will be for its final voyage into the final frontier.


QUEST: Now, with just a couple of hours to go, NASA says it is 90 percent sure the weather will hold for the Space Shuttle Discovery's last ever launch. It's due to take off from the Kennedy Space Center at 4:50 local time.

John Zarrella is there for us -- John, let's -- I mean we've had the last launch of this shuttle and that shuttle and the other shuttle and a few other shuttles.

Is this the last, final time that one of these -- any shuttle -- goes up?


JOHN ZARRELLA, CNN CORRESPONDENT: Yes, you know, that's funny, Richard, because originally, Discovery was supposed to be the very last shuttle to ever fly with this veteran crew on board. It was supposed to go up last September. Then they moved it to November. And then there were technical problems and glitches. And they moved it, now, to where we sit today. And it's no longer the last shuttle. There's another one going to fly, Endeavour, in April. And NASA wants to add a flight in the end of June with the Shuttle Atlantis. It looks like they're going to do that, as well. But that's a huge price tag, about $500 million for every shuttle flight.

And, you know, there's a lot of criticism and questions as to whether that last added shuttle is really needed.


ZARRELLA (voice-over): A moment to be remembered -- historic.

UNIDENTIFIED MALE: Space Shuttle Atlantis now comes home to the Kennedy Space Center for the final time.

ZARRELLA: It was over -- the first of the three shuttles heads to retirement. Clean the tires, polish the metal.

Hold on, not so fast. That was last May. Something happened on the way to the museum.

UNIDENTIFIED MALE: If we didn't think we really needed this flight, I would not be recommending this flight.

ZARRELLA: NASA, with Congressional backing, in fact, urging, decided Atlantis had one more flight in her. Hold off on those moth balls.

Once the space program ends and until commercial companies take over a rockets 10 times safer than the shuttle, the Russians will ferry astronauts to the Space Station. Flying Atlantis shortens that gap and allows NASA to stock the Station's pantry.

UNIDENTIFIED MALE: You know, it can carry, you know, roughly, five to 10 times what one of these single other supply ships can carry. So in one shuttle mission, you could think of me being able to carry at least five other vehicles worth of cargo.

ZARRELLA: But it's an expensive U-Haul trip. Shuttle flights cost about half a billion dollars.

UNIDENTIFIED MALE: The rule of thumb is whenever the Space Shuttle flies, it's a waste of money. The Space Shuttle is hugely expensive for what it does and it's not that safe, which is why it's being disconnected. So to continue it for one more flight is not necessary.

ZARRELLA: But NASA has what it needs to pull off the flight. There was one more external tank at the factory in Louisiana and an extra set of booster rockets came in by train from Utah.

But is this more about putting off the inevitable end and keeping shuttle workers employed than a real need?

UNIDENTIFIED MALE: This is our passion. This is what we do. I mean this is -- this is how we support our families and how we support the American people and the international partners. It's not dragging it out, it's allowing us to continue doing what we do best.

ZARRELLA: Atlantis is scheduled to lift off in late June, return in early July. This time, when the NASA commentator says...

UNIDENTIFIED MALE: Space Shuttle Atlantis now comes home to the Kennedy Space Center for the final time.


ZARRELLA: I -- I think, Richard, that we can be pretty much assured that this is going to be the end of the line for Discovery and then Endeavour and then finally Atlantis. In fact, you heard there from Mike Linebach, the -- the launch director, talking about their livelihoods and what they do best. And he's sitting just over there in launch control right now, as we count down these last couple of hours to really a very historic moment, when Discovery lifts off.

You know, you and I will probably never see, in our lifetimes, nor will anybody -- many people in this world -- a vehicle like the Space Shuttle that can fly up 200 plus miles, repair the Hubble space telescope, fly and build the inter -- in essence, built International Space Station from the shuttle and then return to Earth and land at the landing pad, you know, just a couple of minutes from here. It's -- it is a phenomenal technological achievement.

QUEST: John, this is a business program, so I'm going to put my -- I'm going to get my calculator out.

Do you think -- do you think that they are running these last flights for reasons other than necessity of the ISS?

ZARRELLA: Well, you know, certainly this mission and the next mission to go up, there were -- there were very good reasons to fly them. The last mission, when I talked to Senator Ben Nelson about it, who was a huge proponent of the space program, from Florida. He had said, look, you know, we need to fly that flight. We want to shorten that gap that we're going to rely on the Russians. We want to get supplies up to the Space Station.

But, yes, there are other reasons, as well. You've got 7,000 people here that are going to lose their jobs when the program ends. So even extending it out a few more months gives those people, you know, a -- a little bit more time, where they're going to bringing in those paychecks, there's no question about it -- Richard.

QUEST: All right. In a -- in a word -- we -- we're out of time, John, but I need to -- I need to just ask -- I've been dying to ask you this question.

How many shuttle launches have you covered?

Or have you counted them?

ZARRELLA: I did. In fact, I counted them up recently. It was something like 75.


ZARRELLA: Of the 130.

QUEST: That...

ZARRELLA: Not bad.

QUEST: Many thanks, John Zarrella.

And for his next party trick, he'll tell you how many -- how many miles the shuttle traveled during all of those trips -- or at least somebody will work it out somewhere, I'm sure, before we are finished.

Guillermo is at the World Weather Center.

I'm not sure where in the world you're starting -- Guillermo, but...


QUEST: Ah, good, thankfully. You got the memo.


QUEST: Could -- could you tell us, please, are things looking good?

ARDUINO: Yes, they are. Things are fantastic. We see some clouds. The winds are OK, between 50 and 25 kilometers per hour. And the temperature is 23 degrees. It looks ideal, partly sunny.

So it seems that in two hours, we'll have a go. So we're going to be there, of course. When you go to the other side of the country, and especially in the interests of our Asian viewers, flying from Asia into Seattle, Vancouver in Canada or Portland, Oregon, San Francisco, San Jose, Oakland, all those airports that get the flights from Asia, hmmm, you know, it's not looking that nice.

But in here, in the United States, in Tennessee, Arkansas and into parts of Oklahoma, but especially in Tennessee, is where we see now these storms popping up. So we have the likelihood of tornadoes in the area. And this is in -- in the next hours. It's going to move very fast. You will see that right now, we have, actually, increasing delays in Dallas- Fort Worth, one hour 45 minutes. San Fran, as I told you, 45 minutes and New York, 25, 30 minutes.

But going back to the Northeast and the Mid-Atlantic -- the -- the Midwest, we're going to see some snow here coming and going in the next two days. But it's going to be moving very fast. And the same with the same system that is coming from the south.

So it's not looking good in the Northeast for the next two days. The South is going to improve very soon.

Well, no delays so far for Friday, except for Dallas, with some more storms associated with the same situation that we have right now, and in Houston, as well.

Temperature-wise, minus one in Vancouver. So it's going to continue to be like that. You know, it's cold right now and in the -- the -- the Midwest, also, Detroit at minus six. Another big airport there. But Charlotte, North Carolina, Atlanta, 15, 16 degrees.

Yesterday, I told you that those people -- those foreign nationals trying to leave from Libya were going to encounter very intense winds and also storms. And it's happening, both in the Central Med, in the air. The winds continue to be very intense. There are delays. There are people who are going into Malta, which is this island right here, very next to Libya and south of Cicely. And we have rough weather. We have rough winds. Conditions are bad. And this is improving soon. But we have one more day of bad weather and then the system is moving into the Aegean Sea and into Turkey and Cyprus, where we will have some bad storms there and also cloudiness and cold conditions.

So far in general, Dublin with windy conditions. No more delays to talk about -- back to you.

QUEST: Guillermo, many thanks.

ARDUINO: You're welcome.

QUEST: Guillermo at the World Weather Center.

And if there's any change in that thermometer -- there's not probably going to be in the next hour-and-a-half, but if there is, you come back immediately to tell us about it.

Now tonight, after this program, Larry King sits down with Piers Morgan -- the former and the current CNN host, they have a lot to talk about. That's on "PIERS MORGAN TONIGHT" in just under 10 minutes from now.

We will continue, Sunday night is Oscar night. And thrilled fans across the world are hoping their favorites will get home -- to take the famous statuette with them. Melted down, this chap is worth about $500.

What's all the fuss?

We make an Oscar, in a moment.


QUEST: It may be less than 14 inches tall, but the Oscar statue is Hollywood's big gun and this Sunday night is Oscar's time to shine.

What about the famous figure itself?

Oscar, as a statue itself, is more than the sum of its parts. Each winner will be handed a mold of gold-plated brittanium, which is a metal alloy. Melted down, it's only worth around $500. Of course, wanted as an Oscar, a great deal more.

Oscar isn't from Hollywood. He's made in Chicago and his official name is the Academy Award of Merit. If you win one and decide to sell it, you have to offer it back to the Academy first, for $1. That's unless you got it before 1950. Those sell for thousands.

I got to make my own four years ago. But unlike some of the Sunday night big contenders, my brush with Oscar was no period drama.


QUEST (voice-over): There are statues and figurines and trophies and then there is Oscar.

So, what makes up an Oscar?

The statue is 13-and-a-half inches tall and he weighs in at 8.5 pounds and he's handed out just once a year. The name Oscar is believed to have come from a secretary at the Academy who once noted the statue's face looked like her uncle Oscar. And, oh, yes, Oscar's face itself was updated a few years ago. He had a facelift.

Oscar is born at the factory of R.S. Owens, on the outskirts of Chicago, Illinois.

UNIDENTIFIED MALE: Richard, I want to show you something.

QUEST (on camera): Yes?

(voice-over): The company's president, Scott Siegel, showed me around and made it clear that where this statue is concerned, nothing can go wrong.

SCOTT SIEGEL, PRESIDENT, R.S. OWENS: It's very important. It's the most prestigious award in the world. So you want to make them perfect. We're given the opportunity by the Motion Picture Academy to manufacture these each year. And we're only as good as what we do each year.

QUEST: For such a valuable statue, this is how Oscar begins his life -- a brittanium ingot that's melted down in these red hot furnaces and then cast to the familiar statue.

(voice-over): Any whiff of imperfection, any abnormality, and the whole process starts again.

(on camera): What are you looking for?

UNIDENTIFIED MALE: Right here is very important, the face.

QUEST (voice-over): After careful hand casting, it's time for Oscar to be polished.

(on camera): What are we doing now with the Oscars?

UNIDENTIFIED MALE: We're now going to sort of shine it.

Do you want to try it?

Go ahead. Just don't put too much pressure there, it goes like this.

QUEST: Ooh, they're getting shiny. Ooh.

On Oscar night, I'll know one of the statues was polished by me. I just won't know who's received it.

(voice-over): Oscar is dipped in copper, nickel, silver and then gold. The Academy forbids Scott from telling me just how much real gold goes on every statue.

(on camera): This is probably the closest I'll ever get to receiving an Oscar. So I want to make the most of it. I want to thank all those who made it possible and I want to thank my mother and that music teacher I never liked.

(voice-over): Making the statue can be safely left to R.S. Owens.


QUEST: And anybody who says I've still got that raincoat, absolutely not.

The Oscars will be this weekend and we will have -- there will be sweepstakes, of course, everywhere.

How many of these Oscar best picture movies have you actually seen?

I'll have a Profitable Moment for you after the break.


QUEST: Tonight's Profitable Moment.

All this week, we've been taking you inside the world of Interpol. Frankly, when Interpol agreed to let us visit down in Lyon, France, and to film, my first question was, why?

After all, this is a secret policing organization.

What we discovered, of course, was something of a revolution down at Interpol. The chief of the organization, Ron Noble, told me 9/11 in the U.S. was a turning point. Ever since then, he has completely revolutionized the way it works. In the past 10 years, he's had to ramp up Interpol's authority and largely succeeded. Interpol has extended its work from stopping human trafficking, preventing counterfeit medicines and, of course, even much of the passport work. The data links are phenomenal.

But the core of Interpol for the foreseeable future, of course, is security -- the prevention of there is some. Ron Noble believes he needs a billion dollars a year to do the job. It's a lot of money and perhaps Interpol hasn't made the case for that much cash.

But whatever happens on the budget, having seen inside, we can certainly say they're watching.

And that's QUEST MEANS BUSINESS tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I hope it's profitable.

The headlines are next.