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In Texas, the plummeting price of oil isn’t cause for celebration. That’s particularly so if you’re a land man, one of the hustling claim hunters who have spent the past five years rooting through dusty documents in county courthouses and staking out small-town coffee shops seeking the holders of drilling rights to thousands of plots across the Texas shale-oil regions: the Permian, Eagle Ford, Barnett and Haynesville Bossier basins.

It has been the biggest land grab since the Oklahoma Land Rush of 1889, and it produced a gusher of new oil. There were 185,180 producing wells as of September 2014, up from 151,283 in 2006, according to the Railroad Commission of Texas. And thanks to hydraulic fracturing, which frees oil locked in shale rock, those wells produced. Texas alone added 2 million barrels of oil a day to the global market in the past four years, according to the Federal Reserve of Dallas. That’s another Qatar’s worth of crude.

But the quest for drilling rights has come to an abrupt halt. “Once prices drop below about $65 to $70 per barrel, much of the activity in the shale basins is not profitable,” says Ray Perryman, principal of the Perryman Group, an economics consulting firm in Waco, Texas. Recently, that led Eagle Ford shale players to let go hundreds of land men (and women), according to industry sources.

The company, like many others in the oil and gas sector, is also cutting its capital expenditures. Matador Resources is shutting down Eagle Ford rigs. Laredo Petroleum slashed its capital-expenditure budget to $525 million from $1 billion in 2014. “Texas is a slowdown of a hot economy. Drilling economies pulled up, rigging companies are stopping the drilling–you are going to see unemployment in those regions,” says Detlef Hallermann, a petroleum engineer and a professor of finance at Texas A&M’s Mays Business School.

Digging fewer new wells and closing marginal ones inevitably means fewer roustabouts and riggers and fracking crews, but it also means fewer jobs for everyone along the food chain. Shale regions will also take a pounding because of the reverse of the multiplier effect. (Other big fracking zones, like North Dakota’s shale lands, will also feel the pain.) The shale boom created a housing boom, a hotel boom and a restaurant boom–and a labor shortage that pushed wages ever upward. The town of Midland in West Texas had the highest per capita income in the nation in 2013 at $83,000. It was a good place to sell backyard pools and high-end trucks.

Not so much now. Perryman’s modeling projects annual job losses tied to the oil bust in the 125,000-to-175,000 range, depending on “how low and how long” oil prices remain depressed. The pain will be the greatest in the Eagle Ford play in South Texas and the Permian Basin in West Texas, he says. Houston, the capital of oil, will also get dinged.

But while job numbers will decline, production won’t–at least not at first. Fracking is capital intensive, so the operators, ranging from huge outfits such as Anadarko to hundreds of private-equity-backed partnerships, have borrowed billions of dollars through junk bonds and private placements. Even if the wells aren’t profitable, they can’t be shut off–the bond payments still have to be made, so the cash is needed. There’s also huge asset shuffle taking place as firms are forced to sell distressed drilling projects.

The localized financial structure of Texas shale wells means that the pain will be spread widely. In a typical setup, 20% to 25% of a well’s revenue goes to the subsurface-rights holders in royalty payments, which are often shared by multiple generations of a family. So spending money will become a little scarcer. Cheap oil will also cost the University of Texas, whose $25.4 billion endowment–second only to Harvard’s–has been fueled in part by revenue from wells on land it owns as well as donated wells. Even the price of champion cutting horses may suffer.

Falling oil is dropping the curtain on an extraordinary run for Texas, where unemployment rates in oil counties have shrunk to 2.3%, less than half the national average. Job growth in the energy sector has been five times the state’s average, says the Fed. Since 2001, the Barnett Shale play alone added $120.2 billion to the state’s economy, according to Perryman, and yielded some $4.5 billion in local taxes while contributing more than $6 billion to the state coffers.

Of course, oil booms and busts are as common to Texas as cowboy hats. “This is our fifth rodeo, and I think we’ll work our way through it,” Pioneer Natural Resources president Tim Dove said at a recent Goldman Sachs energy conference. Well, he will. And the Texas economy is certainly more diversified than it was during the last oil bust, in the mid-’90s, having expanded into microelectronics, computers, software and biotechnology, among other sectors.

Low oil prices aren’t all bad for Texans. They will benefit from lower gasoline prices like everyone else, and so will industries that are heavy petroleum users, such as chemical-feed-stock producers. And the state will still add jobs, albeit more slowly; Perryman is forecasting a net gain of about 200,000 to 225,000 jobs this year vs. the 440,000 created in the past 12 months.

Bottom line, the boom is over for the Lone Star State. When it comes to jobs and growth, Texas will have to suffer the indignity of looking more like the rest of America.


This appears in the February 02, 2015 issue of TIME.

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