DOBBS: A provocative new book suggests today skyrocketing crude oil prices may only hint at the real oil crisis yet to come. Saudi Arabia has long claimed the oil fields could meet the world's insatiable demand for oil, but according to my next guest, Matthew Simmons the author of "Twilight in the Desert," the Saudis aren't being truthful. After poring over more than 200 engineering papers, he says Saudi Arabia's giant oil fields are getting old and oil supplies are running out.
This is a huge development if you're absolutely accurate. What will be the impact?
MATTHEW SIMMONS, AUTHOR: Well, the biggest impact, whether the supply's going to decline or whether they stay where they are for a while, or whether they even grow slightly, is that the world built an economy on a presumption that Saudi Arabia's oil could grow to almost indefinite amounts and stay there for years at almost no cost. And the likelihood of that happening is very small.
DOBBS: Saudi Arabia, as you well know, better than certainly most, has 25 percent of the world's official reserves. Do you really believe that those are going to be threatened here both by depletion and by rising consumption?
SIMMONS: Well, first all, even the amount of reserves is a matter of some question. Back at the end of 1979, when some of the top technicians in the world were counting proven reserves, they thought they had 110 billion, and then the number rose to 260 billion eight years later without discovering anymore fields. But the real issue is only a handful of fields have produced all the oil Saudi Arabia has ever produced. And they're all old. And they're all at risk of production collapse.
DOBBS: Bottom line, is the United States, in your judgment, prepared for the oil shock that you foresee so clearly?
SIMMONS: No. I don't think the U.S. is. I don't think the world is.
I think we have blissfully just assumed the Middle East had effectively boundless amount of oil, it could be produced at almost -- at the lowest achievable cost as long as there was stability in the Middle East.
DOBBS: What should we do?
SIMMONS: We need to start preparing for the fact that in all likelihood oil supply is reaching sustainable peak supply on a global basis and start radically preparing a different economy that is less oil intensive in its use, because we're not going to have any more.
DOBBS: The book "Twilight in the Desert." Matthew Simmons, thanks for being here.
