This is a rush transcript from "The O'Reilly Factor," June 12, 2008. This copy may not be in its final form and may be updated.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET and listen to the "Radio Factor!"

BILL O'REILLY, HOST: In the "Impact" segment tonight: As we mentioned, almost every poll now has Barack Obama leading John McCain, and the Las Vegas odds are 1 to 2 that Obama will win. So, you know, it's close, though I thought it would be a little more than that. Joining us now from Washington, FOX News analyst Newt Gingrich, who I'm putting in charge of the McCain campaign tonight. Mr. Gingrich is the author of the brand-new novel "Days of Infamy."

OK, you heard Karl Rove, and you have to say this for John McCain: gave a town meeting tonight, very energetic out there, trying to show the American people that, you know, he's as accessible and as energetic as Barack Obama is. But if you're running his campaign, what theme do you tell him to pound home?

NEWT GINGRICH, AUTHOR, "DAYS OF INFAMY": OK, I think McCain has to slow the campaign down. I think you're exactly right in the direction. That is, he ought to focus on the price of gasoline, on the indications to America of a situation where we're buying way too much energy from foreign dictatorships. We ought to be producing a lot more energy here at home. And I think he ought to offer three or four things.

I also think if they were really willing to be aggressive, they ought to challenge Obama to get off the campaign trail, come back to the U.S. Senate where his party is in the majority and past legislation right now to lower the price of oil.

Let me give you a couple quick things, Bill. And at least one of them — because I listened carefully to you and Karl — and at least one of them, I think you're going to disagree with violently.

First thing is dump about half the Strategic Petroleum Reserve in the world market. You can pump about two million barrels a day. The marginal effect of that will bring down the price of oil very substantially.

Second step, go to flex-fuel cars. I agree with you entirely. I'd create a tax credit for the auto companies to produce flex-fuel cars. The Brazilians will have 80 percent of their cars in the 2011 cycle flex-fuel. We ought to have the same kind of goal. That really helps give a choice for fuels.

Third, open up the coast to drilling, and open up the Rocky Mountains for shale oil. We have in the Rocky Mountains three times the amount of oil that the Saudis have, three times the amount of the entire Saudi reserve in the Rocky Mountains. The Brazilians are now energy independent in terms of oil, because they found two huge reserves in the Atlantic Ocean. It's currently illegal for Americans to go on American territory in the Atlantic, the Eastern Gulf of Mexico, the Pacific, northern Alaska. It's illegal for us right now to go after the Rocky Mountain shale oil. Third thing, it's not just…

O'REILLY: All right, well let me stop you there.

GINGRICH: Yes.

O'REILLY: You know, Jeb Bush didn't want drilling off of the coast of Florida, and you can't get more conservative than he is. And it's an environmental thing. And you're an environmentalist.

GINGRICH: Right, right.

O'REILLY: So you've got to explain to the folks if you're going to drill, and if you're going to go into the Rocky Mountains, one of the most pristine areas in the country, ANWR, I've got no problem with. I mean, we should have been drilling there 15, 20 years ago. I mean, that's insane. You know, if the caribou doesn't like it, you know, we'll relocate them. But you got to explain the environmental impact and what it will be.

GINGRICH: First of all, and we have a drill here, drill now, pay less petition drive at American Solutions that's already gotten 650,000 signatures, including a lot of Democrats. Because at $4 a gallon, people suddenly look up and they say, wait a second, it turns out not a single rig leaked in the Gulf of Mexico during Katrina and the following hurricane. Not a one. It turns out that, in fact, in the Gulf of Mexico, there's a lot of game fishing around the rigs because they serve as an equivalent of a coral reef. And there's a lot of sea life around. It turns out that Norway drills offshore. Denmark drills offshore. Holland drills off. These are very environmental countries. And yet, they're managing to do this. Then it turns out that why are we still putting oil in the Strategic Petroleum Reserve when we have an opportunity to really punish the speculators by driving down the price of oil.

O'REILLY: Yes, by dumping it on the world market. OK, but what about Rocky Mountain with the shale? I mean, you want to have…

GINGRICH: Well, there's a…

O'REILLY: Go ahead.

GINGRICH: Well, first of all, the Rocky Mountains are huge. I mean, if you're saying to me should the Rocky Mountain National Park be off limits, the answer is sure. Should Glacier Mountains National Park be off limits? Sure. Now what about all of the other mountains? What about all the other possibilities? There's a brand-new process where they actually heat the rock, where it's sitting — they don't take it out — and they heat it with steam, and they basically bring out the oil, remarkably different than the way they did it 20 years ago.

O'REILLY: All right. So you're — but what am I going to violently disagree with? I mean, everything you said…

GINGRICH: Well, I thought I heard you tell Karl that you didn't think drilling mattered. I think.

O'REILLY: No, no, no. I don't think we can drill our way out of it, but I mean, I think if you want to drive the price down, you do what you say. I'm not opposed to that.

GINGRICH: OK.

O'REILLY: But I'm opposed to saying I want those flex-fuel vehicles, and I want them mandated by law…

GINGRICH: Right.

O'REILLY: …because that's the only way we're going to get out of this damn thing.

GINGRICH: Well, you also want to have a lot more research into hydrogen engines and into electric engines.

O'REILLY: Yes, but this is real now. We got a country, as you mentioned, Brazil and I mentioned, doing it.

GINGRICH: Right.

O'REILLY: The other stuff is theoretical. Go ahead. I'll give you the last word.

GINGRICH: OK, but remember, there are 90 million or 100 million cars already out there that are not flex-fuel. We need to bring down the price of oil by drilling here and drilling now. And the effect that would have on the world market, they thought Americans were serious, the price of oil…

O'REILLY: Would go down.

GINGRICH: ...would go dramatically.

O'REILLY: OK. Now you would say McCain should throw almost all his resources into that plan?

GINGRICH: Yes, and he ought to challenge Obama head on. Is Obama going to — does Obama really want to punish the working poor of America by taking the position that you can't do all this? Or does he want to…

O'REILLY: That varies.

GINGRICH: I'd say come to the Senate with me, and let's pass it together this week, before the Fourth of July.

O'REILLY: That would be something.

GINGRICH: Let's make the Fourth of July…

O'REILLY: Well, I know Senator McCain is watching tonight, so we'll see what he does, Mr. Speaker. Thanks very much.

Copy: Content and Programming Copyright 2008 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. ( www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.