This is a partial transcript of The Big Story With John Gibson, August 11, 2004, that has been edited for clarity.

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JOHN GIBSON: A slick move from the Saudis. They're promising to pump up production if that's what it takes to keep oil prices down, and 1,000 miles away Russian President Putin is trying to take more control of his country's oil output. So how will both of these events affect what we pay at the pump?

Ariel Cohen from the Heritage Foundation (search) joins me from Washington. The big question, Mr. Cohen, should we expect oil prices to go down?

ARIEL COHEN, HERITAGE FOUNDATION: I wish we could, but, unfortunately, we're going to be stuck with these historically high prices, although I'll mention that in comparison to the oil prices of 1981 we're still at $45 versus about $60 to $70 back in '81.

GIBSON: You mean figuring inflation or was that...

COHEN: In today's — in 2004 dollars back in 1981 oil was between $60 and $70 a barrel.

GIBSON: So are you telling the markets here in this country, $45 a barrel is real, get used to it?

COHEN: I'm saying that we probably are hitting a bottom of $35 to $38 at this point and probably can go as high as — I've seen $48 to $50 over the next two weeks.

GIBSON: $50. OK. Who is controlling these prices? Is it — is it Putin by all these machinations, he is exerting over Yukos, the big Russian oil concern, is he driving prices up or reaping the benefits of both additional wealth and additional influence and power?

COHEN: You're absolutely right in terms of influence and power. Russia wants now to go back to the state-controlled model that they had under the Soviets or something in between. They will have oil controlled by state-run, state-owned companies, by people who are much closer to Putin than the oligarchs of the 1990s.

However, the biggest players are Saudi Arabia, to a lesser degree Kuwait, United Arab Emirates. 55 percent of the world is coming from OPEC and most of OPEC production is in the middle east.

GIBSON: OK, Mr. Cohen, no reason to quarrel with you on that point except that the Saudis have now tried this two or three times, saying we're going to raise our production levels. We want prices to go down. Prices don't go down. So they don't appear to actually be controlling prices anymore, so the question is who does?

COHEN: I would argue that the prices obviously, it's a result of supply and demand. We have economic growth that is decent in this country and you have now China with 7 percent annual economic growth, the second largest consumer in the world and on the other hand, the middle east is shaky security- wise. You have Iraq going down. You have fears about Venezuela and you have Saudis talking probably one thing but still not cranking up the extra one million barrels a day capacity, spare capacity that they have. So talking is one thing. Talk is cheap, and doing something is another thing. If the Saudis weren't so much about oil prices, they should have been cranking out production three, four, five months ago.

GIBSON: I guess my question, last question, bottom line, have we been paying too much attention to the Saudis and not enough to Putin?

COHEN: No, I don't agree with that. I think that we're not paying enough attention to our own demand. We're not paying enough attention to China. It's supply and demand and the security premium of up to $7 a barrel that we're paying because of the radical Islamic terrorism in the middle east.

GIBSON: All right. Ariel Cohen from the Heritage Foundation. He says $50. Ariel, thanks a lot.

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