Water Is the New Texas Liquid Gold

Bruce Frasier sweats in the 106F heat at his Carrizo Springs, Tex., farm while stacking 42-pound boxes of cantaloupes bound for Kroger (KR) supermarkets and Wal-Mart Stores (WMT). But he's turning away all offers for his most prized commodity: water. Texas's worst drought since record-keeping began in 1895 is fueling a rally in water prices as energy prospectors from ExxonMobil (XOM) to Korea National Oil expand the use of a drilling technique known as hydraulic fracturing, or fracking, that uses up to 13 million gallons in a single well.

Frasier, whose Dixondale Farms is the state's largest cantaloupe grower, has been offered as much as 70¢ per 42-gallon barrel of water he pumps from an aquifer beneath his land. That same water fetched no price at all as recently as three years ago, before oil exploration boomed in Texas's Eagle Ford Shale rock formation. So far, Frasier is standing firm. "I've got to have that water for my farming operation," he explains.