Many of the biggest cities in Texas, including Houston, are better prepared to deal with falling commodity prices than they were in the recession-plagued 1980s, but smaller communities flourishing because of booming activity in the Permian Basin and Eagle Ford Shale could be severely impacted, an analysis by BBVA Compass has found.

As of July, Texas ranked as the sixth largest oil producer in the world, the financial firm’s economist Boyd Nash-Stacey said in a 12-page report. The recent surge in oil production from the Permian Basin and Eagle Ford Shale, relative to growth and employment, however, raises concerns about how susceptible the state’s economy would be if oil prices continued to stagnate.

He determined that for a significant reduction in employment and wages to occur, oil prices would have to be in a “prolonged drop” below $70/bbl West Texas Intermediate.

Using data from analyst firm ITG, Nash-Stacey estimated that 15 of the largest shale plays in the entire country are above breakeven with oil prices below $80 /bbl, but if prices drop below $70, only nine remain above breakeven.

“However, five of the major shale formations that remain above breakeven at $80/bbl are in Texas,” including the Eagle Ford Shale and liquid-rich areas of the Barnett Shale, and three sub-basins in the Permian: Midland, Yeso and Delaware.

“As a result, prices will likely have to settle around between $70-80/bbl for investment to continue at its current pace,” said the BBVA economist.

“Even still, more experienced companies could have significantly lower breakeven prices even when drilling in similar fields than companies with less experience. Moreover, accelerated technological breakthroughs could imply that within a short period of time, companies could reap similar rates of returns after oil prices decline.”

The larger metropolitan areas of the state are more immune to commodity prices today because the cities are more diverse, Nash-Stacey said. It’s the smaller communities, now surging in growth with drilling underway, that likely would be most impacted.

Most prone to slumping prices would be the towns that provide workers and supplies for the Permian Basin, including Abilene, the Midland-Odessa area and Wichita Falls in West Texas. Also impacted would be South Texas communities serving Eagle Ford Shale operators around Victoria, and in East Texas, where drillers are working the more liquid-prone Upper Eagle Ford Shale.

In a “severely adverse scenario nearly one-quarter of the accumulated growth over the past three years is wiped out, and Abilene and Wichita Falls would likely trend toward recession,” according to Nash-Stacey.

So far, it’s been a great run in Texas, according to BBVA. Favorable commodity prices and the widespread adoption of horizontal drilling and hydraulic fracturing techniques have had profound effects on the state’s labor markets and its economic growth.

“In fact, since 2009, Texas has added more jobs than any state, seen annual real incomes rise by the second fastest rate in the country (3.5%) and home prices rise to levels 17% above pre-recession peaks,” Nash-Stacey said. Per capita real gross domestic product (GDP), which stands 7% above the United States, “has also completely offset the losses from the last crisis.”

Over the past five years, net domestic and international migration to Texas has increased by an estimated one million people, almost three times larger than California’s net migration in the same period, he noted.

“As a result of strong population inflows and strong corporate investment, Texas real GDP increased at an average of almost 5% in 2011-2013, allowing the state to post the third fastest expansion between 2007 and 2013, when compared with 30 of the top developed economies in the world.”

Average oil and gas industry salaries in Texas also have jumped by more than 54% in the past decade, implying an average increase of 3.3% after controlling for inflation. Average wages in the rest of the country only increased in the same time frame by 0.4%.

Support areas such as petroleum manufacturers, utility providers, chemical manufacturers and air/truck transportation, which account for 11% of all Texas employment “are thriving. In fact, to quantify the knock on effects, incremental investment of $500,000 in the mining sector creates one new job in energy-intensive industries.”