(MONEY Magazine) – It's alarming when a guy like Matthew Simmons starts worrying about the oil supply. He's chairman of Simmons & Co., a Houston investment bank which, for the past 35 years, has done deals in the oil patch. In 2001, Simmons, 61, was a member of Vice President Dick Cheney's energy task force. A few years ago he correctly forecast that North Sea oil production was about to level off. Now he thinks the same may be about to happen in the Middle East. Simmons is convinced that Saudi Arabia, the world's No. 1 producer, has overstated the size of its reserves and may start to see its output decline. Simmons is planning a book on the subject, Twilight in the Desert: The Fading of Saudi Arabia's Oil. He spoke with MONEY's Pablo Galarza.

Q. Why are you so worried?

A. By the time I got back from a 2003 visit to Saudi Arabia, I was quite concerned that their oilfields showed signs of old age. So I dedicated myself to reading everything ever written on the Saudi fields, over 220 papers to date, and I found that the six fields that contribute 90% of the output are in rapid decline and could soon run out.

Q. How soon?

A. I don't have any idea. Unless you are armed with an unbelievable amount of data, it's difficult for outsiders to guess.

Q. How have the Saudis responded?

A. They just produce a graph showing that they can pump out 15 million barrels a day for the next 50 years. If the Saudis wanted to disprove me, all they'd have to do is let an accredited auditor look at data that any bank or buyer would request before lending money or making an acquisition.

Q. Where are oil prices going?

A. I don't make short-term predictions, but in the long run, they'd have to go up.

Q. How much oil is left?

A. Conventional wisdom says that we have 50 to 60 years of supply. But of the world's proven reserves, only 5% have been audited by outsiders. Can you imagine if you said that 95% of companies in the S&P 500 have not had their books verified?

Q. Sounds pretty bleak. Do you see any solution to all that?

A. The first thing is to create transparency in the market. Then we need to open up everything in Alaska and elsewhere, return to nuclear as fast as we can and, of course, there's conservation. Then get busy discovering a new form of energy.