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Oil and water don’t mix. That truism about elements at odds could also serve as an analogy for Matthew Simmons (MBA ’67), who’s sometimes known as a petroleum-industry contrarian. But it’s the hard science behind the old familiar saying that lately has Simmons “raising a ruckus in the oil patch,” said Barron’s (November 29, 2004).

Simmons is chairman of Simmons & Co. International, a Houston investment bank active in the energy sector. As part of a small group invited to Saudi Arabia in 2003, he noticed that Saudi producers had to “strip” water that had mixed with the crude, often an indicator of a depleted well, since oil usually rests on top of water. “When you start getting water in crude, it’s like an elderly man with hardening arteries,” said Simmons, who believes Saudi Arabia’s reserves are significantly smaller than what the country claims. “We are,” he declared, “living with an energy illusion of the highest order.”

Simmons, who is writing a book on the subject and has spent the last two years researching Saudi technical data, has also called for more transparency from the petroleum industry worldwide. The Saudis, for their part, dispute Simmons’s assessment of their reserves, citing, among other sources, the U.S. Geological Survey.

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