This is a rush transcript from "Your World With Neil Cavuto," August 6, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Meanwhile, the energy crisis, some say it is solved? Well, forget Congress. Would you believe that Paris Hilton might have the answer to America's energy crisis?

(LAUGHTER)

CAVUTO: I want you to take a look at this.

(BEGIN VIDEO CLIP)

PARIS HILTON, ACTRESS: OK. So, here's my energy policy. Barack wants to focus on new technologies to cut foreign oil dependency. And McCain wants offshore drilling. Well, why don't we do a hybrid of both candidates' ideas? We can do a limited offshore drilling, with strict environmental oversight, while creating tax incentives to get Detroit making hybrid and electric cars. Energy crisis solved.

Bye.

(END VIDEO CLIP)

CAVUTO: I just want to say officially on this show, I want to make Paris Hilton president of the United States, because, clearly, she gets it. Why can't Congress?

From the star of "A Simple Life," a very simple, alarmingly, deceptively simple solution: Drill now until all of those fuel-efficient cars are ready.

With us now, Democratic Congressman Frank Pallone of New Jersey, who opposes additional offshore drilling.

Congressman, Paris Hilton gets it. Why don't you?

REP. FRANK PALLONE (D), NEW JERSEY: Well, I think the Paris Hilton ad was funny, but the bottom line is that the Democrats have tried over and over again to pass legislation that would allow for more drilling, that would basically allow the Strategic Petroleum Reserve to be used to try to bring down lower prices.

And the Republicans have simply refused to vote for any of these things that would achieve energy independence.

CAVUTO: All right. When you say allowed for more drilling, Nancy Pelosi skipped town and started your five-week recess, specifically forbidding a vote on more drilling.

PALLONE: Well, the -- what we have said is that, right now, a number of the oil companies have about 80 percent of the reserves that are out there that could be drilled. And we have said let them drill on those leases that they now have, be they offshore or on land.

CAVUTO: So, you go -- you go back to that...

PALLONE: And, if they don't, then...

CAVUTO: All right, Congressman, you go back to that same...

PALLONE: ... you know, then they lose their lease.

CAVUTO: All right. You go back to that same canard. I don't want to debate that.

What I want to go back to here is this notion -- Paris gets it -- Barack Obama, by the way, lately, seems to get it -- be open for drilling. Be open for these alternative energy forms. Be open for conservation. We can all fill our tires, I guess, do all that stuff, but be open to it all. Jump ball, have at it, everyone decide that all of the above works for us, and don't pick and choose what you like or don't like. Just do everything.

PALLONE: Well, the problem is that almost everything that you've mentioned, Nick (sic), has been tried by the Democrats and put up as legislation to move, and the Republicans have simply not allowed it to pass, and have voted against it, whether it's...

CAVUTO: When have you wanted to -- wait, wait, wait. No, no, no. When have you wanted to expand drilling beyond what it is now? Update me.

PALLONE: No, we don't want to drill into those offshore areas that are environmentally sensitive. That's certainly true.

But something like 82 percent of the offshore sites now could be drilled with the leases that the oil companies currently hold. And what we're saying is, if they don't drill, they lose their lease.

CAVUTO: All right, now, I'm going to tell you -- you know what I'm going to do, Congressman? I respect you and all, but I'm going to tell you this once, and only once, because I think we go around in circles talking on this issue.

The leases that are out there, many would happily turn in for more promising leases at a moment's notice, and have begged Congress to provide them that wherewithal to swap out the leases.

PALLONE: No, I don't think that's true. I think that they don't want to drill, because they want the price to go up.

CAVUTO: All right, they don't want to.

By the way, one thing I do know about companies, Congressman, they love to make money. And if they can dig up more oil to make more money...

PALLONE: But they are making money hand over fist. And the problem is that they won't drill, because they like the fact that...

CAVUTO: OK. They -- they -- right -- they...

PALLONE: ... that it's scarce, and that they can charge more.

CAVUTO: If it's -- if it's a -- if it's a commodity that you argue we're running out of, and -- and they know they're running out of it, then something tells me it would behoove them to get more of that commodity, so they can keep making money.

But that's neither here nor there.

PALLONE: Well, I don't agree...

CAVUTO: Congressman, what I want to ask you...

PALLONE: ... because, then, the price goes down.

CAVUTO: Oy.

PALLONE: They don't want the price to go down.

CAVUTO: What I want to ask you, Congressman, are you for or against Barack Obama's windfall profits tax plan, that is, in other words, to take some of the profits from the oil companies and use it to fund...

PALLONE: Absolutely.

CAVUTO: ... a rebate for America?

PALLONE: And they should be used for renewables. I think that's a very good idea. And, again, we have -- we have had that on the floor, and the Republicans opposed it.

CAVUTO: Well, maybe they opposed it because it was a stupid idea, right? I mean, is it possible...

PALLONE: No, it's a good idea...

CAVUTO: Well, then what makes the oil companies...

PALLONE: ... because it means that you could take that money for renewables.

CAVUTO: All right.

Now, have long have you been in Congress?

PALLONE: Twenty years.

CAVUTO: All right. So, you just missed the wonderful Carter experience with the windfall profits tax, right?

PALLONE: What I'm saying is that, if you take that big subsidy that the Republicans and Bush gave to big oil, it's about, you know, something like $12 billion over the period of years, and, if you took that back, and gave it to renewables to give people a tax credit or an incentive to do solar energy or wind power...

CAVUTO: No. Well, you know, Congressman, that's a little different.

Now, you and I agree on this much. And I think many Republicans are beginning to grudgingly say, do away with credits and subsidies for an industry that's making a lot of money. I don't think a lot of even conservatives would even...

PALLONE: But they didn't vote for it. They voted against it, Nick (sic).

CAVUTO: I want to get to the issues here and not talking points.

So, let me ask you this. If the Republicans were to agree to cut a lot of the subsidies and tax breaks that oil enjoys, as long as we stopped this debate over drilling, you look to more drilling, you look to some of the things that you want to do, they look to more -- to more alternatives...

PALLONE: Well, we can't drill in environmentally sensitive areas, where it's going to mean that you have an oil spill that impacts the beaches.

CAVUTO: Tell that -- then how are you explaining to your constituents, who are paying through the nose for gas, and a majority of whom say, even in directly affected states like Florida and New Jersey, that they would happily put up with more drilling if it meant...

PALLONE: No, I don't -- I don't think that's true.

CAVUTO: ... if it meant -- well...

PALLONE: I mean, you should know -- you should know, Nick (sic), that I represented a district that's along the beaches and has billions of dollars in industry coming from the beaches, and my constituents do not want us drilling.

CAVUTO: Well, I talk to people who live near the beaches, and I have -- and they have heard that a lot of these offshore plans are 50, 60 miles offshore. They can't see it from their beautiful condos...

PALLONE: No, if you look at the areas, for example, in California or in the Gulf of Mexico where they drill...

CAVUTO: No, no, no. Congressman, you're telling me now that you are against more drilling offshore.

PALLONE: ... there's no tourism.

There's no -- you -- you...

CAVUTO: Barack Obama has said that he is open to drilling more. You're saying no. Barack Obama says that, if it could be included in a list of things that you want to do, he would be for it. Nancy Pelosi says she doesn't want to do it.

PALLONE: Well, Obama didn't say that.

CAVUTO: You just said that you don't want to do.

PALLONE: He said that he doesn't want to drill in those environmentally sensitive areas, but that he would be willing to negotiate. But he doesn't want to do that. And I certainly would not encourage him to drill in those environmentally sensitive areas that might impact the beaches or our tourism.

CAVUTO: So, this whole thing, Congressman, can go away by taxing the oil companies, tapping the excess profits they have -- never mind they pay a ton in taxes as it is -- but you're -- you're arguing, look, they're making money hand over fist. Let's take more of that money.

You weren't around for the Carter years. I -- I have looked at a little, you know, bit of history here. That experience did not seem to go gangbusters. You're willing to try that...

PALLONE: Yes, but what I'm saying is, you take that money you give it to renewables.

CAVUTO: Wait a minute. You're willing to try that again -- well, who...

PALLONE: You give that to renewables like solar and wind power.

CAVUTO: You are now going -- you're Robin Hood now. So, you are going to take from one group, assume that it will work better with another group, and you're going to pick and choose the industries you think will benefit?

PALLONE: Well, what I want to do is to give, like, incentives to homeowners and commercial properties to put in renewables, whether it be solar or wind power or whatever, use that excess profit for that, to give them, you know, some kind of subsidy or tax break if they put solar panels on their homes...

CAVUTO: Congressman, I wish we had more time.

PALLONE: ... or they retrofit...

CAVUTO: Here's -- here's where I see the block, sir. And I see it with Republicans, too. They won't give on these tax credits for an industry that I don't think needs it. You won't give on drilling that your constituents clearly -- clearly want to see.

PALLONE: No, I want drilling to take place...

CAVUTO: Well, you just said you don't.

PALLONE: ... just not in environmentally sensitive areas.

CAVUTO: This is like what the meaning of the word "is" is.

I'm telling you, what you're against is doing the things that your party, in lockstep, rejects, because it doesn't think it's a good idea, or environmentalists have you by a stranglehold.

PALLONE: Well, I represent a district in New Jersey...

CAVUTO: And, by the way...

(CROSSTALK)

PALLONE: ... that has tourism along the beaches. So, this is very important to my district.

CAVUTO: There are a lot of Florida -- there are a lot of Florida areas that have tourism, and they, too, have been looking at the price at the pump, sir, and said, you know what, drill away, drill away.

PALLONE: I don't believe that.

CAVUTO: But there's got to be a middle ground here...

PALLONE: I don't believe that people in those areas are for it.

CAVUTO: OK. OK.

There's got to be a middle ground. I'm saying, if Republicans drop their push for tax credits, would you drop your resistance to what's happening on the other front?

PALLONE: No. We can't have drilling in areas where there are going to be spills that are going to destroy the beaches.

CAVUTO: OK.

PALLONE: No, that's not acceptable.

CAVUTO: All right. Well, and away we go.

All right, Congressman, thank you very much. Appreciate it.

PALLONE: Thank you, Nick (sic). I appreciate being on.

CAVUTO: All right.

Well, it's Neil, but we're friends.

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