This is a rush transcript of "Special Report With Brit Hume" from June 17, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: I do believe that there are places in the world, as I said, that we should not drill. But I certainly think that there are areas off our coast that should be open to exploration and exploitation.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: There's no way that allowing off-shore drilling would lower gas prices right now. At best, you're looking at five years or more down the road.

(END VIDEO CLIP)

BRIT HUME, HOST: Well, there's an interesting controversy. John McCain has taken what many may consider a baby step in the direction of more energy exploration. He's still against drilling in ANWAR, for example, but that was enough to get him at loggerheads with Barack Obama on the issue.

Some thoughts on this now from Bill Sammon, Senior White House Correspondent of The Washington Examiner, Mara Liasson National Political Correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer, Fox News contributors all.

Well, Bill, McCain has now positioned himself to the right of Obama by a very small step. Where does this go?

BILL SAMMON, SENIOR WHITE HOUSE CORRESPONDENT, WASHINGTON EXAMINER: Well, I think the higher the prices go, the more attractive McCain's position looks. He's on the right side of the polls as your poll showed — 67 percent of Americans think we should do greater drilling. Even a majority of liberals say we should do more drilling, and Obama opposes it.

Now, it is a flip-flop for McCain, and that undermines his reputation as a straight-talker, and in fact —

HUME: There is a Rasmussen poll out today. You can see how it breaks down. And suppose you ask that question just of liberals — look where they come out on this. I think we have that as well. Look at this — liberals favor it by a plurality. So that does give you a sense that the polls on this issue have changed.

SAMMON: Yes. And as the gas prices keep going higher, I think the numbers will shift.

So McCain had to flip-flop to get to this position, and that hurts him a little bit. But the bottom line is he ended up on the right side of the position, and I think the stronger position.

HUME: In terms of the polls.

SAMMON: In terms of the polls as this goes forward.

MARA LIASSON, NATIONAL CORRESPONDENT, NATIONAL PUBLIC RADIO: There is something else though. He put himself at least a little bit more in line with congressional Republicans, who have been pushing for more exploration and have really felt that it's a political problem that their standard-bearer is not with them on this.

Even though Charlie Crist and Arnold Schwarzenegger, two very popular Republican governor who don't want off-shore drilling in their states, Chris, I think, has said that he'd be open in certain cases to at least looking at it, and as long as the states can decide for themselves, which is McCain's position. It's just removing the federal moratorium.

And also, Tim Kaine, of all people, who is the Democratic governor of Virginia and a huge supporter of Barack Obama, is open to natural gas exploration off the coast of Virginia.

So this is getting to be a little more complicated than kind of a simple on one side or —

HUME: Barack Obama is against all of it, right?

LIASSON: Yes, but all I'm saying is the politics of this issue is getting a little more complicated than just environmentalists and Democrats on one side and Republicans and the oil industry on the other.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: But by taking only what Brit has called "a baby step" on this, McCain is letting a very strong issue get away.

HUME: Get away?

KRAUTHAMMER: Get away from him, because he refuses to change his position on the most obvious and huge source of oil, which is the Arctic.

Look, he risks losing and alienating people who care about the environment over off-shore drilling while remaining alienated from the majority of Americans who believe that with the gas as high as it is you have to drill in the Arctic.

The argument he could make is so easy, that the wildlife refuge, which would remain pristine, is a third the size of the United Kingdom, and that includes Wales and Scotland, and the drilling area is the size of Dulles Airport.

And McCain says that some areas have to be left pristine. But we have incredibly high-tech now, which is sensitive to the environment. And we are not stopping the pollution by not drilling. We're exporting it. The Saudis have increased production almost a million barrels a day.

Who believes that the deserts in Saudi Arabia are less pristine that the Arctic refuge, or Nigeria, where we get a lot of the oil, which is drilled in heavily populated areas where oil spills and pollution are killing third world people?

It's an affectation of environmentalists to pretend that we are reducing pollution. We're exporting it and we're increasing it, because our technology would do it in the cleanest way.

HUME: Well, let me just go back to your political point though, Bill. Charles suggests that this move by McCain is insufficient to get him any support from people who want more drilling, but enough probably to damage his standing with environmentalists. Do you buy that?

SAMMON: I disagree.

HUME: Why?

SAMMON: I think it puts him on the right side of people who want more drilling, because now he wants more drilling.

Like with so many issues, McCain has positioned himself to the right of Obama, but not sufficiently rightward to satisfy conservatives. By taking this issue and saying leave it up to the states, as opposed to a federal ban on off-shore drilling, that's a conservative principal, to leave it up to the state's rights.

So I think he actually is going a long way towards satisfying conservatives, and this will actually help him.

LIASSON: Yes, I think there is a pattern. And sometimes McCain is just stuck. He gets the worst of both worlds —

HUME: You think that's what is going to happen, he gets the worst of it?

LIASSON: I don't know, but it's possibly that the environmentalists will be mad at him because he used to be their great champion, and he doesn't get enough value — look what happened when he reached out to Jerry Falwell. He didn't get a lot of love from the Christian right. On the other hand, all of his liberal and moderate admirers were mad.

HUME: All right.

Energy is not the only battleground for these two candidates. They have significant differences on national security, specifically on the treatment of prisoners. Stay tuned.

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(BEGIN VIDEO CLIP)

OBAMA: Let's take the example of Guantanamo. What we know is that in previous terrorist attacks — for example, the first attack against the World Trade Center, we were able to arrest those responsible, put them on trial. They are currently in U.S. prisons, incapacitated.

(END VIDEO CLIP)

HUME: That drew a sharp response from the McCain campaign in the form of a statement by, among others, Randy Scheunemann, who is one of McCain's foreign policy advisors.

"Obama," he says, "holds up the prosecution of the terrorists who bombed the World Trade Center in 1993 as a model for his administration, when in fact this failed approach of treating terrorism simply as a matter of law enforcement rather than as a clear and present danger to the United States contributed to the tragedy of September 11," another line rather clearly drawn between the two candidates on an issue of some consequence.

Charles, your view of this debate?

KRAUTHAMMER: Well, the McCain side has the right argument, but it has to make it in detail. It has to explain why the trial was a disaster in 1993.

HUME: Why was it?

KRAUTHAMMER: Because when you give these people the rights of an ordinary burglar — the rights to a lawyer, the rights of discovery — you end up giving them information that you would never give an enemy combatant, which we did.

In that trial, in 1993, we had to give them the name of 200 un- indicted coconspirators, names which immediately ended up in bin-Laden's camp, and they knew what we knew and who we knew.

At the same trial, as the current Attorney General will tell you, because he was the judge in that case, in discovery, the other side learned that we had been listening in on the cellular communications of bin-Laden. Within a week it was shot down, and we lost him, and we couldn't find him for a long time.

It's information you would never divulge, but it's only because these guys had the rights of an ordinary criminal, stuff you would never do against an enemy.

The worst example was 1996, in which the Sudan, where bin-Laden was living, got tired of him and offered him to the United States. And the Clinton administration refused to accept him on the grounds that we did not have sufficient evidence to sustain an indictment.

That is insane. That is not a standard on which you judge somebody who wants to destroy your country. In the Second World War, we had over 300,000 German prisoners. Not one was given a lawyer or habeas or discovery or any of these insane rights.

HUME: Will this position on the treatment of terrorists, treating with these rights, which is what the Supreme Court has basically said and to which McCain is opposed, will this issue work better for McCain or Obama?

LIASSON: I think this is the argument that the McCain camp wants to have almost above any other in this election.

HUME: In this instance, it seems to have been started that —

LIASSON: It's an opportunity that Obama gave to McCain.

I think that Obama needs to do a lot more talking about foreign policy and really explain what he means. He did give us an example of how we did in this in the first World Trade Center bombings and it worked out fine. Later on, he talks about them needing some amount of due process — maybe not before a district court, but some modest sum of due process.

Well, what does he mean exactly? The problem is that Obama is a blank slate on the issues. It's not clear exactly what he wants to do, when he wants to put down —

HUME: Is he a blank slate in the sense that we don't know what he thinks, or he doesn't know what he thinks?

LIASSON: I would start off with saying we don't know, and then we will find out soon enough if he doesn't. But I would say he's a blank slate because we don't know. John McCain is a very well defined foreign policy thinker.

SAMMON: This was a big issue in 2004, a question of whether to prosecute militarily or through civilian courts. Bush won then. McCain is hoping this is a big issue again this year.

I asked John Kerry and Richard Clarke, the former White House Counterterrorism Czar today in a conference call set up by the Obama campaign, what if Osama bin-Laden was captured and taken to Gitmo, would you give him habeas corpus rights, the right to appeal to your detention in civilian courts? They both said yes.

McCain jumped all over that. I think that's a problem for the Obama camp if they're seen as — the spectacle of Osama bin-Laden having access to federal courts —

HUME: Is McCain himself, as of this hour, hasn't said a word about this.

SAMMON: I think he'll jump all over this one. I can see him standing up and saying "My opponent wants to let Osama bin-Laden go to the Supreme Court. I think he should be in a military tribunal and handled that way."

HUME: All right. That's it for the panel,

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