This is a rush transcript from "On the Record ," November 12, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Now for Part Three of your interview with Governor Sarah Palin. We recently returned from Alaska where we spent two days with the governor at home and at work.


VAN SUSTEREN: How are you doing financially?

GOV. SARAH PALIN, (R-AK) FORMER VICE PRESIDENTIAL CANDIDATE: Alaska is doing fine, but we based our budget on that price of a barrel of oil. This summer when it was $140, some of the lawmakers wanted to go crazy in spending.

And we kept preaching, "Nope." Now is the time to be prudent and invest wisely. Let's forward fund education. Let's save for that rainy day.

The energy rebate checks that went out recently to help people pay their energy costs, because it makes no sense--Here we own the energy resources, yet we are paying more for gasoline up here than in any other state. And we refine it up here.


PALIN: It makes no sense. So taking a share of the people's money, it's their money, returning that to them so they can pay their energy costs during this cold winter that's coming too, makes perfect sense.

And, by the way, in some of our communities they spend more on their heating oil bill than they do on their mortgages every month.

VAN SUSTEREN: But here in this state you would think that they would have a better deal. I would think that this would be the best place to buy energy.

PALIN: And we're working on that. And our attorney general is investigating right now why, for instance, the price of gasoline is still higher than any other state, and yet, again, it's developed here, it's refined. It doesn't have that huge transportation cost going to some Chicago hub, perhaps, and then transported back to Alaska. So--

Watch Part 3 of Greta's interview with Gov. Palin

VAN SUSTEREN: There's something funny about that.

PALIN: Yes, there is. So, anyway, the cost of living is high up here, but it makes no sense that the cost of energy is as high as it is up here. We have the resources.

And, of course, we've only spoken of the conventional nonrenewable sources of energy, our oil and gas that we're talking about. And right now, of course, we've got the billions of barrels of oil still underground. We've got the hundreds of trillions of cubic feet of clean natural gas offshore and on.

And with our natural gas pipeline getting underway and the development of our natural gas resources, that's one area where the environmentalists and the pro-development crowd, we do get together on that one, because natural gas is, of course, clean, it's green.

There's no argument there that we need to tap into that and not be importing natural gas. Not when we're so rich with that source also.

VAN SUSTEREN: It's interesting that this is also so much linked to national security, to the cost of living, to being comfortable or uncomfortable.

PALIN: Absolutely. There is that inherent link between energy and security, financial and physical security also.

And that's something that I sure tried to talk a lot about on the campaign trail also, to let Americans know what we can do to meet mechanic's great energy challenges right now. The domestic solutions are here.

And, again, it's not just the conventional sources of energy that we are so rich in.

But when you consider potential for the clean coal technology, here India and China, they are so reliant on some of these sources of energy where the development of their own resources are not as environmentally friendly as the development that would take place if it were all within our control.

And then we could export our technology and sources of energy to those growing countries. It just makes sense that we get that message out there and that more Americans can support the developments we have in mind up here in Alaska.

So oil, gas, coal, and of course other states across the union--so rich in coal, especially--there is more coal in our free country then there is oil in all of Saudi Arabia-for more Americans to start understanding that we have the domestic solutions here.


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