Assuming your petcock is operating properly leave it in the on position. It is opened by vacuum from the engine in this position. Prime bypasses the need for vaccum in order to fill the carberator bowl if empty from repair work or sitting too long.

The Savage Owner's manual states:

"FUEL VALVE:

ON POSITION:  This motorcycle is equipped with an automatic type, diaphragm style fuel valve.  There are 3 positions.  'ON, 'RES', and 'PRI'.

The normal operating position for the fuel valve lever is in the 'ON' position.  In this position, no fuel will flow from the fuel valve to the carburetor unless the engine is running or being started.

RES (RESERVE) POSITION:  If the fuel level in the fuel tank becomes too low for the engine to operate with the fuel valve lever in the 'ON' position, turn the lever to the 'RES' position to use the reserve fuel supply.  In this position, no fuel will flow from the fuel valve to the carburetor unless the engine is running or being started.  (Reserve fuel supply= 2.5L, or .06 US gal.)
NOTE:  After turning the fuel valve lever to the RES position, refill the tank at the closest gas station.  After re-fueling, be sure to turn the fuel valve back to the 'ON' position.

PRI (PRIME) POSITION:  If the motorcycle has run out of fuel or has been stored for an extended period, there may not be any gas in the carburetor.  In this instance the fuel valve lever should be moved to the 'PRI' position.  This will allow the fuel to flow directly into the carburetor even though the engine is not operating.  Upon starting the engine, be sure to return the lever to the 'ON' position or, if necessary, to the 'RES' position.

WARNING:  Leaving the fuel valve in the 'PRI' position when engine is off can be hazardous.  The carburetor may overflow and fuel may run into the engine.  This can cause fire or cause severe damage when you start the engine.  Always leave the fuel valve in the 'ON' or 'Reserve' position."


End of quote.