This is a partial transcript from "The O'Reilly Factor," October 6, 2005, that has been edited for clarity.

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BILL O'REILLY, HOST: Thanks for staying with us. I'm Bill O'Reilly.

In the "Unresolved Problem" segment tonight, as you know "The Factor" is urging Americans to conserve gas and energy and not to buy gasoline on Sundays as a symbolic protest against the oil companies, which we believe have taken advantage of the hurricanes and the war on terror to jack up prices.

Now today the mouthpiece for the U.S. oil companies, the American Petroleum Institute (search), took out a huge newspaper ad essentially saying high gas prices are not their fault. Are you buying that?

Let's take a look at the last quarter. Exxon/Mobil made almost $8 billion in profit. Two years ago its quarterly profit was about half that. So they've doubled in two years.

Chevron (search) last quarter made nearly $4 billion in profit, also a double in two years.

And Conoco-Phillips (search) has nearly tripled its quarterly profit in two years. Dollars don't lie.

Joining us now from Washington, Tyson Slocum, research director for Public Citizens Energy Program (search). From Chicago, Phil Flynn, vice president at the Alleron Trading Corporation (search).

So Mr. Flynn, I mean, I've got stats, man.

PHIL FLYNN, VP, ALLERON TRADING CORPORATION: You sure do.

O'REILLY: I've got them.

FLYNN: Double profits at a time when oil demand is at an all-time high.

O'REILLY: At a time when the country's suffering.

FLYNN: And, guess what? What you didn't show with these numbers, Bill, how much dollars invested did it take to get those profits?

O'REILLY: Stop. Stop.

FLYNN: No. This is a very important point.

O'REILLY: Because dollars invested...

FLYNN: Yes.

O'REILLY: ... have averaged out over the past 20 years. It would be pretty much the same.

FLYNN: I'll tell you this. The average return on the dollar invested in the oil industry is about 7.7 cents. That's per dollar invested. How easy do you think it is to get a gallon of gas to somebody's house?

O'REILLY: I guess it's a lot harder now than it was two years ago.

FLYNN: It is. You're right.

O'REILLY: Why is it harder now than it was two years ago?

FLYNN: Because worldwide demand has gone through the roof.

O'REILLY: So it's harder to get the stuff out?

FLYNN: It is. You're darned right it is. The low-hanging fruit is gone. There's less oil out there. We have to drill more, and it's not easy to find. And it's going to take billions of dollars in investment and, you know, people...

O'REILLY: If it were all that hard the profits would be going down because they had to work harder to get it.

FLYNN: Not when you have...

O'REILLY: Got to put more people on, more equipment.

FLYNN: You're right.

O'REILLY: This is — look, here's the deal, hold it, hold it, hold it.

FLYNN: I'm ready.

O'REILLY: This greed from the oil companies is going to put this nation into a recession, I predict. We'll have that recession in 2006. OK? Because this is now spreading out, it's fanning out into everything; not just oil prices, not just gasoline, not just home heating. Everything is going to go up. The economy is going to take a hit. Everyone will suffer.

My contention is the oil companies don't have to double their profits. They can maybe make them 2/5. Take a little less for the good of the nation?

FLYNN: So other countries like China and India can take the oil supplies? We're spending billions of dollars to go after oil supplies. We're in a global race to secure oil supplies, Bill, for the future. Supplies are tight right now. It's going to take billions of dollars in investment, more than we've ever invested before. You want to talk about building new refineries...

O'REILLY: No, I want to talk about getting fuel cells going on.

FLYNN: What about other businesses making profits.

O'REILLY: I don't want to talk about refining. I want to talk about fuel cells. We should have had them already.

FLYNN: You're right. Part of the reason we haven't had it has been poor regulation and because we kept oil prices down artificially at some point and discouraged investment.

O'REILLY: All right. Let's let Mr. Slocum jump in here.

FLYNN: sure.

O'REILLY: I want to stay on the profits. Now for two years, you saw enormous profits the oil companies have made, Mr. Slocum. How do you read that?

TYSON SLOCUM, RESEARCH DIRECTOR FOR PUBLIC CITIZENS ENERGY PROGRAM: Well, clearly there's a direct correlation between the record profits by the oil companies and the record high prices being paid by consumers. And all you have to do is look at the numbers, Bill.

The refining profit margins for U.S. oil refiners have jumped 255 percent in just the last year, from about 30 cents per gallon of gas refined up to almost $1 per gallon of gas refined. That means they're making a buck on every gallon of gasoline that they're refining. And that's why the top five in the United States have recorded profits of $228 billion.

O'REILLY: OK. But if China and India want to pay $65 a barrel from OPEC (search) and the United States companies know that that oil can go to another market at that price, then, you know, what are the United States oil companies supposed to do? They've got to compete, have they not?

SLOCUM: Well, I mean, first of all, you have to remember that the United States is the third largest crude oil producing nation in the world, and we're being price gouged on that crude oil that we're getting from federal land most of the time in Alaska, offshore, in Texas...

O'REILLY: How do you know we're getting gouged? How — you know, maybe Mr. Flynn is right. Maybe there are indeed costs, and there are drilling costs...

SLOCUM: Absolutely not.

O'REILLY: No?

SLOCUM: All you have to do, Bill, take a look at the annual report by Exxon Mobil (search). In there they boast about their return on average capital employed. That is a term about how much money they're making off of their capital investment.

Thirty-seven percent rate of return in 2004 on their drilling operations in the United States and almost 29 percent rate of return on their U.S. refining margins. Those are way above the industry average. This shows that a company like Exxon Mobil, which has had profits of $89 billion since 2001, is making most of its money off of Americans in the U.S. market.

O'REILLY: All right. Let's let Mr. Flynn reply to that. Go, Mr. Flynn.

FLYNN: Well, you know, the truth of the matter is when we talk about return on investment, that's a good thing. Because it's going to take a lot more investment to get the U.S. oil industry where it needs to be to meet the future needs.

And because we've created this — this stereotype that oil companies are evil and they're bad for the country, we have really discouraged oil companies from investing on these shores. We've discouraged building refineries. We've discouraged drilling. We want to use more natural gas but don't drill for it. You know, don't build a new import facility for liquefied natural gas. Oh, my goodness. Don't spend all that money.

This is a dangerous stereotype, and it's putting us in danger, the average American. Part of the reason why we're paying record high prices isn't just because of the oil companies. It's because worldwide demand is rising. We have very poor regulation in this country when it comes to gasoline, because of all the 50 different blends of gasoline. We're federally mandating.

O'REILLY: But all of this was in play two years ago, see.

FLYNN: No, it wasn't, Bill.

O'REILLY: yes, it was. You had to blend all those things in a refinery. Yes, you did.

FLYNN: Yes, you did. You go back to '99 when those regulations went, oil prices were $10 a barrel. We're now at $70.

O'REILLY: All right. I'm just saying, look, two years ago they were making tons of money. Now they're making obscene amounts of money. I'm going to give Mr. Slocum the last word, to be fair.

FLYNN: OK.

SLOCUM: First of all, don't forget about the energy traders. On September 2, the Associated Press quoted an energy trader from a hedge fund who said they were making so much money off of Hurricane Katrina that they wouldn't have to work for the rest of the year.

There's absolutely price gouging going on by the oil companies, by the energy traders. Enough is enough. We need Congress and the White House to act.

O'REILLY: I don't know if we need that. I don't want the federal government regulating this industry. What I want...

SLOCUM: Who else is going to do it?

O'REILLY: What I — the people. I want everybody to get so mad they cut back 20 percent and send a message that way.

Gentlemen, thanks very much. We appreciate it.

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