'Your World' on origin of high gas prices

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Pain at the pump 'all about markets': Cavuto

Neil Cavuto explains how high gas prices have come to be on 'Your World.'

This is a rush transcript of "Your World with Neil Cavuto" on March 8, 2022. This copy may not be in its final form and may be updated.

NEIL CAVUTO, FOX NEWS ANCHOR: All right, if aren't getting out of his oil market didn't woo him, maybe the prospect of doing without Big Macs in Russia will.

Welcome, everybody. I'm Neil Cavuto, and this is YOUR WORLD.

Well, Joe Biden went ahead and made a major pivot, when he said at first he wasn't going to ban all Russian oil from this country. Today, he did. And it was sweeping, and it was immediate. And it was already signed. And we got the Brits to do the exact same thing, even though the rest of Europe isn't too keen on it, and all of this at a time gas prices still advanced and oil prices still advanced.

But the hope is they won't advance as much, and this as we're learning that more and more American companies are following McDonald's and saying, well, if you McDonald's are going to get rid of the Big Mac in Russia, we at Starbucks are going to do the same with our lattes, and Coca-Cola saying with our soda.

All of them have abandoned and announced they are abandoning in Russia, in the case of McDonald's, planning to shut down 850 Russian stores in the process, and all of this at the same time we had a tantalizing offer from the Ukrainian president on what might be a key concession.

That's how some are interpreting, a concession that might end the fighting, the fighting rampant today, though. Russians' shelling continued to affect people trying to get out of the country. This is for the third time we have seen this type of activity. But record numbers of people are leaving the country, better than two million, 200,000-plus a day. We will update you on that.

In the meantime, let's get the latest from Peter Doocy at the White House.

Peter, this was a notable shift on the part of the president. Some interpret it as a sign down the road he might shift on something else, like domestic oil production. None of that today, though, right?

PETER DOOCY, FOX NEWS WHITE HOUSE CORRESPONDENT: And, Neil, a notable shift just in the few hours.

When we heard the president here explaining that he was going to cut off Russian oil imports to the U.S., he explained all the different measures that he thought the U.S. could take to try to limit some of the rising prices at the pump.

But just a few minutes ago, he landed in Texas and he made it sound like a lot of this is out of his hands.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: It's going to go up.

Can't do much right now. Russia is responsible.

(END VIDEO CLIP)

DOOCY: Can't do much right now. That's a few hours after the president said that defending freedom is going to cost us as well. And that is exactly why officials around here had been making it sound like banning Russian oil imports was very unlikely to happen.

This was only five days ago:

(BEGIN VIDEO CLIP)

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: We don't have a strategic interest in reducing the global supply of energy, and that would raise prices at the gas pump for the American people.

(END VIDEO CLIP)

DOOCY: The president argued this morning that two big things are going to help, first getting more electric vehicles on roads and winterizing homes so people don't have to worry about oil prices in the future, second, talking to allies about releasing a combined 60 million barrels of oil from a joint strategic reserve.

We also know Biden officials are talking to a trio of countries with spotty human rights records about what it would take for them to pump more oil. That's Venezuela, Iran and Saudi Arabia.

(BEGIN VIDEO CLIP)

REP. JIM BANKS (R-IN): Joe Biden plans to put terrorist ahead of Texas, before Texas.

(END VIDEO CLIP)

DOOCY: The president is in Texas right now. He's on his way to go speak at an event about veterans who fell ill after exposure to burn pits. We don't know if we are going to hear him talk again today about Russia -- Neil.

CAVUTO: Peter, thank you very much.

Peter Doocy at the White House.

William La Jeunesse is seeing firsthand how people are reacting to the oil prices and the gas prices, high as they are, in fact, in dollar terms, the highest they have ever been, but it's particularly painful in California, where they heap a lot of taxes on top of that.

William, what's the reaction there?

WILLIAM LA JEUNESSE, FOX NEWS CORRESPONDENT: Well, Neil, people are beginning to cut back, right, $6.09 a gallon here in West L.A., $6.99 in Mid City L.A., nationally, about $4.17 a gallon.

Now, when President Biden took office, a barrel of crude was about $65. Today, it is $130, the increases at the pump however even more dramatic right, about $1 a gallon in just two weeks. That means less spending on other consumer goods and restaurants, forcing people to make choices. Vacation, maybe not. Slower growth.

Yet oil is the number one driver of inflation, right? Anything you would buy, everywhere you go has to absorb that price hike. Caught in the middle, consumers, who yesterday actually crashed the GasBuddy Web site, searching on where they could save a nickel or dime on a gallon of gas.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I was in Beverly Hills, and that was like $7 -- about like $7.50. So, I drove over here and I was like, yo, I saved $3.

UNIDENTIFIED MALE: I need to find another place to -- more cheaper. We -- yes, that's how we need to do it.

UNIDENTIFIED MALE: I think, that for workers like me that do delivery driving, it makes it almost impossible, because they're not willing to compensate for a higher wage. So it's all coming out of my pocket.

(END VIDEO CLIP)

LA JEUNESSE: Experts say this price spike is driven more over uncertainty and Russia than supply and demand.

It's true prices rallied coming out of the pandemic. Refiners and producers did cut back when everybody worked at home. But with Ukraine, now speculators have jumped in. And now with the U.S. banning those Russian imports, prices here at home reflect the scramble to replace that production, albeit small, with long-haul truckers and families, everyone feeling a little pain at the pump.

(BEGIN VIDEO CLIP)

JOHN QUELCH, UNIVERSITY OF MIAMI BUSINESS SCHOOL: If everybody sees $4, and then, one month later, they see $5, that's when it becomes problematic, because it's not just the level of increase.

It's the speed with which the increase has occurred that makes IT dramatic.

(END VIDEO CLIP)

LA JEUNESSE: So, how long does this last, Neil? Frankly, nobody knows.

What we do know is, prices come down a lot slower than they go up -- Neil.

CAVUTO: William, that's a great report, puts it in perspective, but, man, some of those prices, yikes.

A lot of times, on this show, we just try to get the facts right. It's not opinion show. I mean, no one cares what I think, and nor should you. But when I hear information that constantly gets out there and then gets accepted as fact, we're just here about the facts, just the facts.

And for those of a certain reference, it's sort of like Jack Webb. We just want the facts, the "Dragnet" thing. So when I hear this issue of domestic oil production, and it having no effect on prices, it kind of irks me, because it's time for a little bit of economics 101 when it comes to oil production.

And I think a lot of people could benefit from just getting this straight. This is what got my goat. Take a look.

(BEGIN VIDEO CLIP)

PSAKI: Keystone was not an oil field. It's a pipeline. Also, the oil is continuing to flow in, just through other means. So it actually would have nothing to do with the current supply imbalance.

The Keystone pipeline has never been operational. It would take years for that to have any impact. The Keystone pipeline was not processing oil through the system. That does not solve any problems. The Keystone pipeline isn't even really functioning. I mean, it was only partially built. It isn't even really functioning.

So suggesting that changing that would lower the price of gas, I don't know that makes substantive sense.

(END VIDEO CLIP)

CAVUTO: All right, I have great respect for Jen Psaki and the people trying to push this argument that the pipeline or domestic production doesn't weigh in on the price of oil.

But the fact of the matter is, and she's right about this, that, at the time the president essentially shelved Keystone, the prospect of getting oil from it immediately anyway was remote. It was at least a year away to get some oil, years away to get the 830,000 barrels that the administration of Donald Trump was trumpeting at that time.

We're going to talk to his energy secretary about that. But I want to stress here, oil trades on the global markets. It's like a stock. So it reacts to developments, like it did on January 20, when oil prices jumped and continued jumping.

Now, in large part, Ms. Psaki is right to say that a lot of that was the boom we got coming out of a near-stopped economy from the pandemic. Absolutely so. Demand was building and supply seem constrained.

But the markets trade on this like they do any stock, not on the news, but on the impact of that news. Let me give you an example. When a company comes out with big earnings, sometimes, folks wonder, gee, then why did the stock sell? Well, because, sometimes, the guidance the company gives, gives the prospect that maybe things won't be so robust in the future.

So it is trading and investors are reacting to that development, not so much the news of the moment or the past, the latest quarterly earnings, but the prospect that things might not be so good.

Now, the reverse can oftentimes be true. You have a company report lousy earnings, but convinced that the future looks better, and people bid up the price of that, even though those things it's forecasting are quite some time off.

Oil works the same way. It trades in the open markets, just like stocks. Globally, investors sort of pick and choose what motivates either bidding prices or staying away from it.

When this president announced that he was going to stop Keystone production and sent a clear signal that domestic oil production would not be his cup of tea, well, that prompted a lot of traders to see and bid up the price of oil, in the likelihood that at least future supply would be limited. It's all about markets.

There is no cabal here trying to set this. I just want to be very, very clear about this, because we're about the facts. We're about the economic reality that affects prices. Now, do sometimes markets go too far? Absolutely. Sometimes, do they get it wrong? Absolutely.

Did we in 2008, when we got up to $141 a barrel, bid it up too far too fast? Well, we must have done something, because a financial meltdown followed. And within five or six months, it was down to $31 a barrel.

Now, you're probably saying, Neil, you're boring us to tears on this. But it is an important economic point I want to raise here. The idea of a pipeline and its effect when it's shut down, it's not the prospect of where things stand in the moment, because, as Jen Psaki said, there was no oil coming out of it in the moment, and the big oil supply that would come was still years off.

Furthermore, it was supposed to be oil coming from Canada, Alberta, Canada, into this country, meaning that it would lock in North American production of crude we badly need. That was based on the notion that we weren't going to get that anymore. The markets read into that, all right, there's certainly a finite supply coming out of the United States.

One other footnote on Ms. Psaki before I stop lecturing on this, a great deal of discussion about the 9,000 leases and contracts that the oil industry has. She's exactly right. What she leaves out is the 37,000 leases the oil industry had just last year. It has exhausted as many of those leases as it can.

Oil guys want to make money. God bless them. That's their right. And some of those leases, they don't see as productive, or they could take much longer to bear fruition. But they prioritized enough to take close to 40,000 leases on land and whittle it down to 9,000 today.

That's all I wanted to relay here, the real story, what motivates pricing. It's fear and greed. It's anticipation. Sometimes, it's right. Sometimes, it's wrong. But then there are the facts.

And here to help elaborate on them, Gary Kaltbaum, a good market read.

Gary, the bottom line is this. We have looked at oil from the prism of limited supply, at least coming from this country, or not as much supply. And now we're frantically trying to replace oil from Russia with other nefarious alternatives. But the bottom line, it's about supply that could be a lot bigger here that we're not tapping here, right?

GARY KALTBAUM, FOX BUSINESS CONTRIBUTOR: Neil, if the president surprised the markets today, and said we have changed our stance, and we are going to make sure we are producing 13, 14 million barrels a day, you would have seen oil drop $15, $20, maybe even $25 today. Why?

Because traders, investors and speculators are leaning big time long right now. They would have to switch gears immediately. And the short sellers would come in. But instead, the same old, same old, and to use the excuse that, oh, it would take time anyhow, meanwhile, they're touting electric vehicles to all, which will take decades to all, so the illogical continues to rule.

And I will tell you the lower-income and the lower-middle-class income families right now are being crushed. Yesterday, on my radio show, I spent three minutes listing 150 products that are made with petroleum. The list is actually 8,000. And that includes solar panels and things like that.

I do not think this economy and families can stand if we continue with the $124 oil that we're at right now. And it looks like nothing's going to be done here in the United States. And we get the turn to wonderful human beings like Mr. Maduro down in Venezuela.

CAVUTO: Well, that is a little weird.

(CROSSTALK)

CAVUTO: And, certainly, there's no denying that, coming out of the pandemic, we would see oil prices rise. You're going from an economy in park to certainly economy that's moving.

KALTBAUM: Sure.

CAVUTO: And things are going to jump. And that's exactly what happened. I get that. Obviously, the Ukraine situation took that to a new level of crisis.

But the fact of the matter here, there would be very little damage done just acknowledging that maybe it's time for a pivot. Maybe it's time to explore U.S. options here. There are plenty of them. Maybe it's time to get the pipeline started again, so all of that oil from Alberta, Canada, makes its way here to fill up the supply side of it.

The issue now going forward, whether you agree with that or not, is what happens now? Because oil prices still climbing again today, gasoline prices still climbing. The fear is, Gary, they keep climbing like that, it's going to cause a slowdown in and of itself, the stag in stagflation hits us, and that's going to then maybe bring lower prices.

But, by then, we're all in a recession, right?

KALTBAUM: Yes, we're seeing it now.

As I look at the market, the airlines and cruise lines and travel that were coming out of their bear market, because of coming out a pandemic, just tanked to new yearly lows. And I got to talk about the word leadership.

A big part of any leader is to be able to be flexible when things change. And this president just has his feet in cement, refuses to change with the fact that we're at $124 oil. And I have to tell you, we don't know exactly what's going to happen going forward out of Russia and Ukraine.

CAVUTO: But you don't think he signaled that he just might, Gary?

But one of the reasons briefly for a market turnaround from when we were down over 300 points was that maybe, maybe this pivot on Russian oil, where they first said no oil from Russia was not an option, now it is, that this might signal he might be more open to this. You don't think so?

KALTBAUM: Well, I sure hope.

But it just looks like they are a determined bunch. While all this was going on yesterday, Mr. Buttigieg. Vice President Harris were out talking about electric vehicles and just shrugging off oil companies. And I have to tell you, the Permian Basin, a little place in West Texas, in Southern New Mexico, they have 20 billion barrels underneath their 250-miles-wide and 300-miles-long area there.

There is a ton of oil to be had here. At this juncture, we should be doing it. The worries about oil going forward, fine. If you want to lower it later, fine. But right now, you have got to take care of Americans, and Americans are suffering in droves. And we haven't even seen prices go up, which is going to happen the next two weeks from the last two weeks.

Wait until you see $8, $9 in California. No fun, my friend.

CAVUTO: All right, Gary Kaltbaum, thank you very, very much.

One last boring academic point I will raise with you before we get to the former energy secretary of the United States Rick Perry, it's about supply and demand. But what's left out, it's about anticipated supply and demand, just like it's about future guidance when you weigh whether you should buy or sell a stock.

And the markets are convinced there will be limited supply. And that's the issue. Now, if you open up future potential supply, the markets could pounce on that and think it's hunky-dory. But, again, it is about that basic math. It's about understanding, much like we do with stocks, how the underscoring company is doing.

So, oftentimes, you will hear stocks trading on a price-to-earnings multiple. That sounds like gobbledygook, but is the stock price justified by the earnings that you can see going forward? It's the going forward part that's important. If you believe that Amazon is going to continue to make money hand over fist or Apple's going to make money hand over fist, then you're basing it on future expectations that their business will continue to be boffo and it's worth buying.

Contrary to that, if you're looking at oil, and you think supply is limited and won't be as much of it out there, then you start weighing that and saying, well, if it's going to be in scarce supply, I'm going to bid it up, or at least the idea that it should be bid up.

And that has been happening, not exclusively because of production in this country, other events that have been very, very big, and have obviously moved this in a way that no Republican or Democratic president could deal with.

The reality, though, is, the market is saying we have our doubts about the future. And in this case, when they have their doubts, they're more inclined to bid up the price than cut the price.

To the former energy secretary of these United States, Rick Perry.

Secretary, good to have you.

Are you getting a sense from the Biden administration that, because of this change on now banning all of Vladimir Putin's oil, when he said it, he was only open to a partial ban, that he just might, he just might pivot on domestic production?

FMR. GOV. RICK PERRY (R-TX): Neil, let me just share with you that was a really great segment.

The American people really needed to hear that economics 101 class, if you will, to understand what's going on. You get more of what you incentivize. It's really that simple. Whether you're a governor or whether you're the president of the United States or whether you're running a company somewhere, if you overtax, over-regulate, overlitigate, you're going to get less of that.

If you free up the market from the overtaxation and the over-regulation -- and I'll suggest to you that's what's going on here. The president gets up and says one thing, and then his Cabinet goes off and says something not online with that at all, when you think about the idea that we're going to have electric cars, we will take care of the gas prices.

CAVUTO: Right.

PERRY: I mean, that is such a disconnect.

My hope is that Mr. Biden, President Biden, will, in fact, see the error of his way, will pivot. I don't think the market believes he will. I don't think those around him are getting signals that that's what he's going to do. But the fact is, we have the supply in this country.

If we could see from this administration clear evidence that oil and gas companies can make a profit, listen -- and then there's nothing wrong with that. The idea that they're not going to go take leases, buy permits that are not going to be profitable makes all the sense in the world.

For Mr. Psaki to stand up and say, well, there's 9,000 leases out there, well, if they can't make money or if you go invest your money there, and then, because of the government regulations, or they're slow-walking permits or what have you -- and all of this is happening -- if she would go educate...

CAVUTO: It can take years. It can take years.

So what you're saying, essentially, Secretary Perry, to that background noise is, that dog don't hunt.

So now, now -- I'm kidding -- but now I'm beginning to wonder here. If, if it looks like this doesn't change, and we kind of stick to these levels, oil could go prohibitively higher. Now, we know from experience, Secretary, that it gets to a point where it gets so high that people -- it's like a no mas situation. It creeps into every facet of the economy.

And then, all of a sudden, we have got a recession, or, worse, a meltdown. Now, that was a big, big story back in 2008 and 2009, when we went from $140 oil to about $30 a few months later. The financial collapse didn't help matters any. But it's all then about how much we can take this, absorb this, and consumers can deal with this.

What does your gut tell you?

PERRY: I wish I could tell you $200 oil was not in our future, but I can't say that.

When I see what's going on in Ukraine, the absolute idea that we are -- we're out bargaining with madmen, whether it's in Iran, whether it's in Venezuela. Russia is sitting down at the table with us dealing with the Iranians at this particular point in time. That makes absolutely no sense to me at all.

So, I said in an earlier interview that, when you deal with madmen, when you spend that much time with madmen, not only is it a bad look. You have the potential to become one yourself.

And I just think it is in the U.S.' worst interests to be sitting down with Venezuela, to be sitting down with Iran, to be trying to negotiate with these individuals at this particular point in time, when the fact of the matter is, the answer is right here, right in front of us.

(CROSSTALK)

CAVUTO: Well, there can be an issue, right, of being too stubborn, right?

And, I mean, you have been an advocate. I know we talked many, many times. You were all in on all energy ideas, not one, at the detriment of the other. I think of states like Louisiana. I had Senator Cassidy on earlier today talking about they're very big into wind and all these other technologies, as they are natural gas and all, a major, major player in that field.

So they're all in on all ideas. So it's not coming necessarily at the expense of green or traditional. It's all in on everything, so that we have everything. Why can't we just do that?

PERRY: That would be a good idea, Neil.

CAVUTO: Yes.

All right, Rick Perry, a pleasure seeing you again, sir, the former energy secretary of the United States, longest serving governor of the beautiful state of Texas, I might point out.

In the meantime, we can go back and forth debating the impact of higher oil and gas prices. Right now in Ukraine, there are far more urgent matters, like life and death.

Let's go to Benjamin Hall in Kyiv right now with the latest -- Benjamin.

BENJAMIN HALL, FOX NEWS CORRESPONDENT: Yes, hi, Neil.

Well, across this country today, just far more tragedy. On the one hand, we saw humanitarian aid, unable to get to the people who need it. On the other hand, we saw the people who so desperately needed to get out unable to do so.

In the city of Mariupol, which has seen heavy shelling for much of the last week, 200,000 people, they remain stranded, no water, no heat, no food and looting broken out in that city. Hospitals are now reporting severe shortages of antibiotics and painkillers. And the death toll inside that city for now is unknown.

There was one successful evacuation today from the northern city Sumy, 3,500 people taken out on buses. It's the first successful prearranged evacuation since the invasion began. And Russia has also announced there will be another cease-fire tomorrow at 9:00 a.m. in Ukraine in four cities.

But Russia has shelled their corridors over the last few days and mined them, meaning there is now a little faith in what Russia can offer. Meeting this weekend as well, we expect further negotiations between Russia and Ukraine, so the diplomatic path also moving forward. But, for now, civilians continue to die in the country, 21 civilians killed in Sumy, rescuers desperately trying to get people out of that city, in Kharkiv, 27 civilians also killed.

President Zelenskyy, speaking earlier to the British Parliament, again, called for help.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): We are looking for your help, for help of the civilized countries. Please increase the pressure of sanctions against this country. And please recognize this country as a terrorist state.

And please make sure that our Ukrainian skies are safe.

(END VIDEO CLIP)

HALL: Around Kyiv, there were more scenes of desperation, as Ukrainians tried to flee the widespread bombardment, young and old crossing the Irpin River to reach the capital, the mayor of the town saying he would never surrender and that he would stay and fight.

And other people are coming to fight as well. We now gather that 40,000 foreign fighters have come in to Ukraine to join the battle against the Russians. And on that diplomatic front, it's very interesting, because both sides seem to be watering down their demands, President Zelenskyy earlier saying that he would no longer demand and look for NATO membership.

And on the Russian side, Dmitry Peskov, the Kremlin spokesman, saying that they were looking for recognition of Crimea, Donbass, Luhansk, and for Zelenskyy -- they said Zelenskyy could stay in power and they just wanted neutrality, so actually some slightly significant shifts on both sides as far as the diplomatic path, not that there's a real anticipation for breakthrough, but it does show some progress or some desire to move forward is being made -- Neil.

CAVUTO: We can only hope.

Benjamin, thank you, my friend. Be safe, Benjamin Hall.

Again, the fact that Ukraine's President Zelenskyy is open to reassessing NATO and whether Ukraine could or even should be a part of it, it's a fight that's gone on for years and years before this. But it is maybe a potential olive branch?

Let's get the read from General Keith Kellogg, the former national security adviser under Vice President Mike Pence.

General, how significant is that, NATO isn't that important to us?

GEN. KEITH KELLOGG (RET.), FORMER PENCE NATIONAL SECURITY ADVISER: Well, thanks, Neil.

Before I go, look, I listened to the last segment. And I'm an old oil field roughneck field hand. My family's business was an oil. It was fascinating to listen to your segment, incredibly well done with the former governor as well.

CAVUTO: Thank you.

KELLOGG: Look, NATO is very important.

And -- but what I'm seeing in this whole thing going forward is all battles, all wars have branches and sequels. And there's more branches and sequels in this than I have got fingers and toes. It goes back to the viability of NATO, transference of Polish MiG-29s to Germany, then trying to get them into the Ukraine, clearly, Putin overestimating his army and underestimating Zelenskyy and the Ukrainian people, their willingness to fight.

It goes on and on. It's just fascinating to watch, let alone the economic factors that you're seeing, what we're seeing even today with oil. But I think what Zelenskyy said is a major shift. When he says, look, I don't want to be necessarily part of NATO, that's like an olive branch to Putin.

And we will see what Putin wants to do. But I think Putin has been so embarrassed by the role of his military and how it's performed, and that he's got a pretty firm adversary in Zelenskyy, who's turned out to be quite Churchillian in what he says and how he acts, I'm not too sure that Putin doesn't want to go in the -- for the kill.

But, look, Putin has got a real problem. He's got almost 100 percent of his army now pushed into Ukraine. He can't even get to the western part of Ukraine. He is going to be lucky if he even finishes the eastern part.

And I think this thing still has some days to play, with Kyiv especially. And if he wants to go into a city, Neil, I'm telling you, armies hate fighting in cities. It eats up units, and the Ukrainians are going to fight. This could be, frankly, the Soviet Union's Stalingrad. This may be the Russian Stalingrad, and a fight to the death coming in the near term.

CAVUTO: General, a lot of people always wonder why, when it comes to these sanctions that get bigger and bigger, more painful and more painful, this Cheshire cat smile on Vladimir Putin's face, and many suspect because he has a backdoor way to get that oil to countries like China, maybe India.

KELLOGG: Right.

CAVUTO: And speaking of China, sir, it is now looking at buying a stake in the Russian energy giant Gazprom. It's also looking at buying a very big player, the Rusal International, United Rusal International. It's a big aluminum player.

So it seems like China is going to be there as a fallback for Russia. If it is, should they be looking also at sanctions from us for doing business with a country we in the Western world have sanctioned?

KELLOGG: Look, Neil, I have said all along our biggest adversary, growing adversary is China.

And they're just so showing today and in their actions earlier that they're no friend of the United States. They are looking for global dominance. They're going to push. And they're, frankly, probably looking at Putin right now and going maybe that a handshake wasn't such a good deal. This guy isn't as strong as we thought.

But I understand the importance of Russia. I understand the importance what's going on. It's primarily a European issue, even though he's got nukes. It's sort of like -- I hate to say this, like Vermont National Guard with nukes. And I probably insulted the Vermont National Guard, but we need to keep focusing on China, their economic growth, their military growth and their diplomatic growth.

And let me just finish with one thing. Here's what's kind of bothering me right now. There's no diplomatic overtures by the United States, because we have got no relations right now with Russia. Biden has no work with -- ability to work with Putin. Putin doesn't like Biden.

So we're looking outside. We see China talking to Macron. We see China talking to Olaf Scholz. They're excluding us from the diplomatic conclusion. And wars eventually end through diplomatic conclusions. We're just not there yet.

CAVUTO: General, well put. Very good seeing you again, sir. Thank you very, very much.

KELLOGG: Thank you.

CAVUTO: One other footnote.

And I will wrap this academic argument on gas and oil prices and go away, because I know you're saying, Neil, you're really justifying just how boring you are. I live on boring, by the way.

This is according to the Department of Interior. The U.S. had more than 37,000 oil and gas leases last year, now down to 9,000. Does that sound like an industry that is deliberately holding off on production? You decide.

(COMMERCIAL BREAK)

CAVUTO: Ukrainian President Zelenskyy vows to fight Russia in the forests, in the fields and the shores.

He got a standing ovation out of the Russian Parliament. Maybe because he sounded like someone named Winston?

After this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ZELENSKYY (through translator): First of all, to Ukraine and to the United Kingdom...

(APPLAUSE)

(END VIDEO CLIP)

CAVUTO: All right, that was the British Parliament, of course, the Ukrainian president, Zelenskyy, giving an unprecedented address to U.K. M.P.s in the House of Commons, especially helping when he would say things like, we're going to fight Russia in the forests, the fields and the shores, that the fight is on, even though, behind the scenes, some back- and-forth on what could be some peace-saving gestures.

Let's get the latest right now from Jennifer Griffin following it all from the Pentagon -- Jennifer.

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: Neil, U.S. officials were blindsided today by Poland's offer to send its MiG-29 fighter jets to Ramstein Air Base for transfer to Ukraine. And it's not clear the U.S. has agreed to this arrangement.

Senior U.S. defense officials also tell me they cannot confirm the killing of a top Russian general near Kharkiv, Major General Vitaly Gerasimov. This is not the same Gerasimov as the head of Russia's armed forces.

U.S. defense officials also are not confirming the exact number of Russian soldiers killed in Ukraine, despite these remarks today by the head of the U.S. Defense Intelligence Agency at the worldwide threat assessment hearing on Capitol Hill with the nation's top intelligence chiefs.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: ... say in open session how many Russian troops have been killed?

SCOTT BERRIER, DIRECTOR, DEFENSE INTELLIGENCE AGENCY: With low confidence, somewhere between 2,000 and 4,000. That number comes from some intelligence sources, but also open source and how we pull that together.

(END VIDEO CLIP)

GRIFFIN: U.S. Director of National Intelligence Avril Haines and FBI Director Chris Wray said today Russia and other bad actors support malign influence campaigns here in the U.S. via particular groups. They were referencing disinformation promoted by Russian bots online calling for domestic protests -- quote -- "It does continue to be a phenomenon. Expect it to continue to be a threat."

CIA Director Bill Burns said today during the hearing that Ukraine has -- quote -- "unsettled" Chinese President Xi Jinping, as it has brought Europe and the U.S. closer together. China, he said, is also wary of possible reputational damage for association with Moscow, that from the head of the CIA.

Russia's moving on Kyiv from three directions, according to a senior defense official, not making much progress, but that is still Putin's main goal. Russia fired an additional 50 missiles at civilian population centers in the past 24 hours, double the number of missiles as the day before, Neil.

CAVUTO: Jennifer Griffin, thank you very, very much.

Well, the longer this goes on, is there a greater risk that Vladimir Putin gets more desperate and a lot more gruesome?

After this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

AVRIL HAINES, U.S. DIRECTOR OF NATIONAL INTELLIGENCE: Putin is unlikely to be deterred by such setbacks and instead may escalate, essentially doubling down.

WILLIAM BURNS, CIA DIRECTOR: I think Putin is angry and frustrated right now. He's likely to double down and try to grind down the Ukrainian military, with no regard for civilian casualties.

(END VIDEO CLIP)

CAVUTO: All right, that sounds like a potentially very desperate, a very violent Vladimir Putin.

To Maryan Zablotskyy, the Ukrainian Parliament member, who joins us from Ukraine, what he makes of all this.

Maryan, if they're right, a desperate Vladimir Putin is going to be a horrific Vladimir Putin, as if he hasn't been already. What do you think?

MARYAN ZABLOTSKYY, UKRAINIAN PARLIAMENT MEMBER: Thanks for having me.

Well, I think he's not desperate. He's delusional. The whole idea that his 150,000 army would be greeted here with flowers was ridiculous to begin with. He always miscalculated. Obviously, people around him do not bring him critical information, or they...

CAVUTO: We're having some audio problems with you, Maryan.

(CROSSTALK)

CAVUTO: But if I could ask you very quickly, President Zelenskyy has held out the possibility this idea of being part of NATO, not being part of NATO.

He's kind of cool on it and wanted to relay that, I guess, to Russia.

If your country had to give up on the notion of ever joining NATO, would that be a deal-breaker for you?

ZABLOTSKYY: It's in our Constitution that we should join NATO, but we aren't invited into NATO. At least, we were not in the next 10 years. So it was never on the table.

I think it was a principal position for Putin to show that he can do all the things, that -- that he can just invade the country and do what he wants. I think he wants a military victory, but he will not get it, for sure.

CAVUTO: So, the notion that you might never become a member of NATO, but, but Vladimir Putin and his troops go, what would you think of that?

ZABLOTSKYY: I think that, after this invasion, it's a nonstarter.

It's clear that Russia is a threat to us. It always was. It was a threat to us for generations. And now we have no turning back. We have to win by military force, by military campaign. And then we can be a good ally to NATO.

I think it is clear that Ukrainians have the fighting spirit to fight all the Russians, even despite Russia having 10 times the military budget that Ukraine has. And we would be a strong supporter to NATO, as you see from our military forces and how effective they are at repelling one of the supposedly greatest and most evil armies of the world.

CAVUTO: Very good point.

Maryan, thank you very, very much.

We're going to talk to Senator Pat Toomey of Pennsylvania, what he makes of this overture, whatever you want to call it, on the part of President Zelenskyy and whether it changes anything -- after this.

(COMMERCIAL BREAK)

CAVUTO: All right, this overture, whatever you want to call it, on the part of President Zelenskyy and Ukraine to say, you know, this whole NATO thing isn't a deal-breaker, I'm very much paraphrasing.

Senator Pat Toomey of Pennsylvania with us.

Senator, you read from some of the people on the ground, including this Parliament member who's putting up the good fight: We're way past the whole NATO thing.

So, if that falls on deaf ears, where are we here?

SEN. PAT TOOMEY (R-PA): Well, Neil, it was never about NATO. Let's be honest.

Putin knew that Ukraine wasn't joining NATO anytime in the foreseeable future. And he also knows that NATO is not a threat to Russia. I mean, come on. That's not a mystery. We have NATO countries that have a border with Russia. They have never been threatened by the Baltic countries. They wouldn't be threatened by NATO in -- Ukraine in NATO.

That's not what it's been about. It's been about him trying to expand his sphere of influence, and the fact that he can't tolerate a Slavic country at his border that is embracing the West and thriving, which is where Ukraine was. And that's why he invaded.

So, it was really never about them only joining NATO.

CAVUTO: You know, Senator, this other plan -- and some say we're distant from it -- where Poland gets some planes, and it then goes into airspace over Ukraine, how do you think Vladimir Putin would react to that?

TOOMEY: I don't know, Neil.

And I don't think anybody does. But we can't decide that there's nothing we can do because we don't like the way Putin might react to it. But what he's done is absolutely appalling. He is murdering people by the thousands. There's people leaving Ukraine by the millions. This is a free, sovereign country that was no threat to him. And he has brutally invaded it.

There has to be a very, very high price. He has to come to the conclusion that this was a huge mistake, or it won't end in Ukraine. And, frankly, he's not the only audience here. I think Xi Jinping needs to be -- as he watches this play out, he's got to decide that this is going very, very badly, and maybe it wouldn't be a good idea for him to follow any kind of model like this.

So, I think...

(CROSSTALK)

CAVUTO: Well, let me ask you about Xi Jinping, if I can real quickly, Senator, if you don't mind.

TOOMEY: Yes.

CAVUTO: Xi Jinping is apparently willing and eager to buy Russian oil, if it's verboten everywhere else.

TOOMEY: Yes.

CAVUTO: He is also dabbling around and taking stakes or plans to in a number of Russian companies, including their largest energy producer.

If that sort of stuff continues, if Russia finds an end-run through China around these sanctions, would you recommend taking actions against China, sanctions against China?

TOOMEY: Well, there's an easy way to prevent that, Neil, and that is to impose secondary sanctions on Russian banks.

And what -- the way the secondary sanction works is, it's a very simple proposition that we establish, we, the United States. And that is, if you're a bank anywhere in the world, you can do business with Russia if you want, but then you can't do business with the United States. There are no major international banks that are going to decide they'd rather do business with Russia than the United States.

That's how you isolate the Russian economy. That's how you bring it to its knees. If the Chinese...

CAVUTO: But you wouldn't go after China? You wouldn't directly go after China?

TOOMEY: That does go after -- that -- no, that does go after China directly, Neil, because if the Chinese banks were then to provide financing through whatever mechanism they choose, then they would be subject to that sanction, just as any other bank would.

CAVUTO: All right.

TOOMEY: By the way, I don't think China can replace the demand for Russian petroleum products that the West purchases.

That's part of the reason why we have to shut down our purchases of Russian energy.

CAVUTO: Right. Got it.

All right, Senator, thank you. I apologize for the truncated time, with all this breaking news.

TOOMEY: That's all right. Thanks for having me.

CAVUTO: But, again, some options for Russia, but not necessarily for China?

We will have more after this.

(COMMERCIAL BREAK)

CAVUTO: Fascinated or obsessed with oil prices or markets the worldwide.

A baby separated from its dad, that's a tad more important, don't you think?

Mike Tobin in Lviv, Ukraine, this is playing out across the country -- Mike.

MIKE TOBIN, FOX NEWS CORRESPONDENT: Well, the mayor of Lviv says the constant flow of refugees is really maxing the capacity of this town to handle them.

You have 50,000 who are arriving by train every day. Two million refugees overall have crossed to the west of this country; 1.2 million of them have gone into Poland. But 200,000 of them roughly stay behind in this town. A lot of them are arriving by bus. And those who arrived by bus, a lot of them are stopping at Lviv Arena.

And that's a former home to World Cup soccer or European Cup soccer. And it's now become a coordination center, where they are fed, where someone finds the possibility of putting a roof over their head and their needs are taken care of.

(BEGIN VIDEO CLIP)

VICTOR STEPANIUK, LVIV REFUGEE CENTER COORDINATOR: The most, that their psychological health is bad because they saw bombed and wreckage, and they just moved in very stressful circumstances from their places of living.

(END VIDEO CLIP)

TOBIN: Now, different structures are converted into emergency housing.

In Lviv, we found an artist loft that had become an emergency shelter. Mostly, women and children are staying in them, as the men are staying back to fight. But we found one woman who was driven from the Donbass by the fighting, moved to Kyiv, and has now been driven from the fighting in Kyiv.

(BEGIN VIDEO CLIP)

VALREIA PROKOBENKO, UKRAINIAN REFUGEE: Why would anyone deserve being deprived of their houses, deprived of their families, their dreams, their lives just for no reason?

I don't think -- I don't think someone deserves it at all.

(END VIDEO CLIP)

TOBIN: And the prediction is, we could see as many as five million refugees before this is over, Neil.

CAVUTO: Just incredible.

Mike Tobin, thanks for putting that in perspective.

It kind of makes you think of the oil markets and our own markets and saying, painful, but nothing like that.

Here's "THE FIVE."

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