During a June 25, 2008, appearance on CNBC’s Kudlow & Company, Sarah Palin said, "Sen. McCain is wrong" on the issue of oil drilling.  She said, "I think he’s going to evolve into eventually supporting ANWR opening also …  I’d like the opportunity to change his mind about ANWR."  She was also asked about the possibility of being chosen as McCain’s running mate and said, "it’s really probably out of the realm of possibility to be tapped for that position, so I don’t even have to worry about it."  

Read the transcript of the interview below the fold.

Hat tip: Environmental Capital.

CNBC’s Larry Kudlow:  Sen. McCain says it’s too pristine to drill, Sen. Obama says that drilling won’t work, what is your response to this?  How do you fight back?

Palin: Well, it will work and Sen. McCain is wrong on that issue.  He’s right on a whole lot of issues though, thank goodness, and he’s understanding and evolving with his position on OCS [Outer Continential Shelf drilling], so that’s encouraging.  I think he’s going to evolve into eventually supporting ANWR opening also.  Obama is way off-base on all that.  Those politicians who don’t understand that we need more domestic supply of energy flown into our hungry markets, you know they’re living in lala land and we’re in a world of hurt if their agenda continues to be to lock up these safe, secure, domestic supplies of energy.

Kudlow: Tell me about the world of hurt, in your judgment.  The criticism of ANWR is — this is what you hear from people in both political parties — there’s not enough to matter, it will take too long, and it won’t impact the price of oil internationally or gas at the pump.  How do you respond to that?

Palin:  Well, it will impact, in a positive sense, the price of fuel eventually; we’ve got to start somewhere.  Again, we’ve got domestic supply sitting there underground the reserves are ready to be tapped, and nowhere more than Alaska, Alaskans would be impacted by development in ANWR and here in Alaska our constituents, the people who live here, want it drilled.  That tells me that we have confidence in the safety and the responsibility that we’ll see there with the development of ANWR.  Remember too, Larry, we’re talking about a sliver of the coastal plain of Alaska being explored and drilled for oil.  It’s about the footprint of a 2,000-acre plot of land that’s smaller than the footprint of LAX, for instance.  So it’s not so grandiose an acreage that it is out of the realm of possibility for others to start understanding why it is that we can do this safely, we could have a small footprint, and not adversely impact the land, the wildlife, that’s part of Alaska.

Kudlow:  What have we got up there in ANWR? Just a bunch of big fat blue flies? People say nobody goes up there. Humanoids don’t populate it.  It’s just the blue flies.  I mean I want to keep the blue flies healthy; maybe you can tell us about that.

Palin:  We want to keep the blue flies healthy also. It’s a small portion of land up there.  Alaskans understand that while we have these reserves underground ready to be tapped, we want to invite safe, responsible development.  We want those who can safely develop, we want them to compete for the right to tap these resources and start feeding these hungry markets.

Kudlow: How long will it take? Sen. Obama says this and a lot of Democrats say this, some Republicans.  How long will it take, Governor, to start lifting out of ANWR?

Palin:  It’s going to take at least five years.  And there are other areas of Alaska too that have the reserves that need to be tapped, certainly offshore, there’s trillions of cubic feet of natural gas and billions of barrels of oil there too that need to be tapped.  We also have a natural gas pipeline that is underway now, a process to get that constructed, where we can build infrastructure and allow known reserves of natural gas up on our north slope, it’s already there, it’s already proven, to be tapped and flow through our natural gas pipeline.  Our legislature is dealing with that issue right now, getting ready to license a company to build that gas line, again to feed these hungry markets.

Kudlow: So now you’ve got another case where both candidates seem to be off course.  Sen. Obama wants a windfall profits tax on oil companies and Sen. McCain talks about obscene profits, which I regard as the near cousin to the windfall profits tax.  What’s your response to these criticisms?

Palin:  Well, we just went through a process of making sure that the oil and gas resources that Alaskans own are properly taxed.  We just increased a tax on profits of oil companies up here because an earlier version of Alaska’s tax formula had been corrupted by some politicians who are now in prison for the corruption, but we had to revisit the way that we were going to tax profits on oil companies, we just got through that.  It wasn’t an obscene amount of tax placed upon them; in fact, it’s driven more desire to explore and to develop with independent companies coming into Alaska.  On a national level they’re going to have to deal with that, but we’ve just dealt with it on Alaska’s level, and we have a healthy valuation of our and gas reserves, and we’re driving healthy revenue for our state off that.

Kudlow:  Well, is “profits” a dirty word in energy or other businesses?

Palin: Well, no of course not, and low taxes we know spur the economy.  I’m a Republican, I am for low taxes.  We have to make sure that an appropriate value is placed on oil and gas resources, and that the people who own these resources are able to benefit from the development of them.  But, no, “profit” is not a dirty word.

Kudlow:  Why don’t we just liberate and decontrol and deregulate the whole bloody energy business whether it’s oil, gas, shale, nuclear, coal, natural gas, as well as wind and solar?  Why don’t we just decontrol, deregulate, go for an America First energy policy.  Get independent of Saudi Arabia. America first, create all these millions of high paying jobs, why isn’t anybody talking about that in this race?  That’s the natural Reaganesque thing to do, isn’t it?

Palin: Yeah, absolutely.  You’re hitting the nail right on the head.  That’s what so many of us normal Americans are asking, same thing, why aren’t our candidates talking like that?  Where we can secure American and we could be more independent when we talk about energy sources if we could drill domestically.  Here we sent [Energy] Secretary Bodman overseas the other day, and our President had to visit the Saudis to ask them to ramp up development.  That’s nonsense, not when you know that we have the supplies here.  You have the supplies in your sister state called Alaska where we’re ready, willing, and we’re able to pump these supplies of energy, flow them into hungry markets across the U.S.  We want it to happen, it’s Congress holding us back.

Kudlow:  I’ve got some sound from Sen. John McCain. Please take a listen:

[Questioner: Would you consider Alaska Gov. Sarah Palin for a vice presidential running mate?

Sen. McCain: Could I say that this meeting is adjourned? We're still going through the process, but the Governor of Alaska is a wonderful person and very popular in her state and a very honest and straightforward one, and I think has a future in our party.]

Kudlow:  Governor, you probably heard Sen. McCain waltz his way through that one.  If he asked you to be his vice president, would you accept in light of your disagreement, apparently, over ANWR drilling?

Palin:  I’d like the opportunity to change his mind about ANWR, I’ll tell you that.  But, Larry I’m going to give you the same answer that any other potential VP gives you and that is I really enjoy my job here in Alaska as Governor.  I believe that there’s a lot that Alaska could be and should be doing to contribute to the rest of the U.S. and I think I can do that in my job here in Alaska.  I know that the other potential VPs are saying the same thing that they like where they are today.  I also have to say though that it’s really probably out of the realm of possibility to be tapped for that position, so I don’t even have to worry about it.

Kudlow: Well, OK, you’ve got a lot of work to do drilling up there to help to rest of America, but let me ask one final question:  In your judgment, Is it time for the Republican Party to put a woman on the ticket?

Palin:  We’re overdue for that, absolutely.  I would love to see that happen.