Sir Ian Wood said that if prices stayed where they were then more tax breaks would be needed to ensure continued investment in the North Sea.
He said crude prices below $50 a barrel were unsustainable.
There have been recent concerns expressed that prices could slip to as low as $30 a barrel.
The economic slowdown in China is seen as a major factor.
Sir Ian told the BBC: "The industry is right now facing as tough a time as it has ever faced.
"I think government and industry must get together and talk about the tax regime.
"There must be some clever thinking to incentivise investment.
"Otherwise we will not be in a position to take advantage of the upturn."
Earlier this month, the lower oil price forced Premier Oil to re-negotiate its debt conditions with lenders.
Oil firms are facing some of their toughest times due to the latest falls in the price of crude, a leading industry figure has said.