• This is a partial transcript from "Your World with Neil Cavuto," May 21, 2004, that was edited for clarity.

    NEIL CAVUTO, HOST: President Bush telling me yesterday oil prices (search) will not halt this economy’s recovery, and Treasury Secretary John Snow here to say today he is right.

    Treasury Secretary, good to have you.

    JOHN SNOW, TREASURY SECRETARY: Neil, good to be with you. And I’m glad to see that after dealing with the president you are slumming today, but I’m still welcome.

    CAVUTO: Hardly slumming, sir. This development from the Saudis that they are going to open the spigot a little bit more and encourage OPEC to do the same, do you believe it?

    SNOW: Well, yes, I do. I think if they say it they’ll do it. They’ve gone on record saying it now, I understand. And it is welcome news. It’s overdue news and welcome news.

    CAVUTO: Secretary, are you worried that if the Saudis or OPEC had not done this, that this was going to slow the economic recovery?

    SNOW: Well, it wouldn’t help, that is for sure. Oil prices above $40 a barrel are not helpful to this recovery. They would put it in a negative position. And I’m delighted to see it. I think that the underlying strength of our economy is so pronounced that we can continue to grow and expand with oil prices like that. But we’ll do a lot better and so will the world economy with prices that are more moderate.

    CAVUTO: The administration’s position has always been, Secretary, when it comes to these high oil prices, do not feel tempted to tap the reserve. Is that policy permanent?

    SNOW: Well, it is unless there is an emergency of the sort that led to the creation of the SPRO. We don’t...

    CAVUTO: You’re talking about the Strategic Petroleum Reserve.

    SNOW: The Strategic Petroleum Reserve.

    CAVUTO: Right.

    SNOW: You don’t rule it out if there is an emergency of the sort that was contemplated in establishing the Strategic Petroleum Reserve, but it was not established for the sort of situation we face today with somewhat higher prices than we would want to see.

    CAVUTO: Now I don’t want to read into anything, sir, so if I’m going off on a James Bond bent here, you can just tell me. But the fact that the administration is not open to tap the reserve, and ignoring all this pressure, which must be huge on you guys to do so, are you saving for something more than a rainy day? Is something bad going to happen?

    SNOW: Well, we’re not forecasting that. But we want the integrity of the program to be maintained. It was set up for very specific purposes, for genuine emergencies, and it ought to be reserved for that purpose. So we’re not forecasting anything, but we want the integrity of the program to be maintained.

    CAVUTO: Sir, while I’ve got you here as well, I know you don’t like to comment on issues concerning the Fed, but the fear in the market seems to be that, because things are humming along just fine and the economy is improving just fine, that the Fed not only has to raise rates sooner than expected, but more than expected. Do you think if the Fed were to do that this economic recovery would fall into question?

    SNOW: No, not at all, Neil. I think the market has read the Federal Open Market Committee’s statements, they’ve read the chairman’s statements, and if you look at the yield curve, look at the bond rates, look at mortgage rates, it is clear that there is anticipation of some action at some point by the Fed.

    CAVUTO: All right. Treasury Secretary, hardly slumming with you here. Thank you very much, sir. Appreciate it.

    SNOW: Hey, thanks. Good to be back with you, Neil.

    CAVUTO: The treasury secretary of the United States.

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