This is a rush transcript from "Special Report," March 8, 2012. This copy may not be in its final form and may be updated.


STEVEN CHU, ENERGY SECRETARY: According to the Obama administration, the p roduction of petroleum liquids in the United States have increased now -- I believe it's the highest it's been in over eight years.

REP. STEVE SCALISE, R - LOUISIANA: We've seen just from 2010 to 2011 an 11 percent reduction in oil production on federal lands. In the Gulf of Mexico, exclusive ly, we have seen 17 percent reduction in oil production. Where the increase has come is on private lands.


BRET BAIER, ANCHOR: Well, a battle over energy up on Capitol Hill. On the Senate side Senate Republicans proposed an amendment to take the decision of the Keystone XL pipeline away from the president, give it to a federal agency and approve that pipeline. The president made personal calls to Democrats, lawmakers, to lobby against this. These are the Democrats who voted against this amendment, it did end up failing, not -- didn't get the 60 votes needed to pass. And the House speaker weighed in on that lobbying effort.


REP. JOHN BOEHNER, R - OHIO, HOUSE SPEAKER: I don't know how the president can say I'm for an all-of-the-above energy strategy and then lobby against the Keystone pipeline which is supported by almost 70 percent of the American people. His actions are not matching up with the rhetoric that he is using. And the fact is the president wanted to blame us for blocking the Keystone pipeline, and here it is, the president himself, personally calling senators asking them to vote against this amendment in the Senate today.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The president obviously has communications with members of Congress with some regularity.


BAIER: Wasn't too much more from the White House on the efforts, the phone calls. We're back with the panel. What about this issue overall, Steve? How is this playing out?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, it's a huge issue both in terms of the substance of it, in terms of what we're seeing with gas prices but also in terms of the politics of it. If you just think of what we've seen over the last couple of days on the presidential campaign trail, you've got Newt Gingrich releasing a 30-minute video on this. You've got his podium with a gas pump on it. He was visiting a gas station. Rick Santorum shortly before we came on air sent out a tweet about it, he mentions gas prices in his speeches. Mitt Romney just gave a speech in front of an oil rig. This is something Republicans see it as a great vulnerability for the White House, and I think they should. The fact that the President of the United States was making calls to lobby Democratic senators came because he was worried that this could actually pass and he would look weak, and it would put him in a bit of a pickle. The fact that he was making those calls, though, I think up-ends the White House's argument that they are not politically responsible.

BAIER: Jeff?

JEFF ZELENY, NEW YORK TIMES: I think that if you talk to the president's advisors, one of the top concerns, at least domestically, is gas prices. So optically it doesn't look that great for the White House right now that he is sort of trying to step in front of this. The bigger problem for this a lot of the highest gas prices are coming in swing states where Democrats need to win, where his re-election is going to be on the line, like Ohio and Pennsylvania. So this is a big worry for the White House. And it should be.

BAIER: Well you have also some Democrats on that list that we put up earlier for re-election in swing states, Claire McCaskill voting against this effort.

MARY KATHARINE HAM, THE DAILY CALLER: The issue of why the gas prices are high is complex. The issue of whether it's a huge political issue is simple. And he will take flak for it. And people who are charge will take flak for it. And when people look at the situation and they see the energy secretary saying it is not our goal to get gas prices down, he said some things in 2008 that sort of reinforced that for people and they see the energy secretary doling out all these huge loans for alternative energy that end up very obviously failing, and then they see this sort of no-brainer in Keystone and the president actively lobbying against it, I think it makes a difference for people.

BAIER: It is important to note that oil prices are complex. It's a world commodity. There are a lot of different factors, it's not just supply, it's not just demand. There is world supply issues and world demand issues. But on the simple term, who is winning this back and forth politically?

HAYES: I think politically there is no question that Republicans are winning it. In part they are making -- everything you just said there is true about the way that oil is priced. However, it doesn't mean that the United States and the U.S. government in particular, can't do anything to affect those prices. If you look what President Bush did back in July 2008 when he lifted the moratorium in the east and west outer continental shelf you saw gas prices come down 12 percent over 45 days. That's not insignificant.

What happens is you've got betting on the future supply of oil. People make those bets based on what signals they are getting from the administration. When an administration signals that it's not interested in increasing supply on something that is as simple as this that does affect prices.

BAIER: Speculators factor in, oil companies and their big picture factor in, but the whole supply and demand question is really interesting. Secretary Chu today, Jeff, up on Capitol Hill saying, yes, when you release the Strategic Petroleum Reserve the prices did go down, and then conceding that supply does matter. The President has talked about demand and lowering demand.

ZELENY: Right. And he mentioned in his White House press conference earlier this week that the administration is looking at some other options. So my guess is that they will do something in the months forward. But the simple reason he is losing the argument is because he is the incumbent. It is his problem. He made the exact argument against President Bush against Republicans when he was running for president, and now it's coming back at him. It's as simple as that.

BAIER: That is it for the panel. But stay tuned, a head-to-head political match-up.

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