California Governor Jerry Brown delivers his inauguration address on January 5, 2015. Photograph by Hector Amezcua / ZUMA Press / Corbis

Back in 2011, the Texas economy was doing so well, and California’s so poorly, that the Democratic lieutenant governor of California, Gavin Newsom, travelled to Austin to seek advice from an unlikely mentor: the Republican governor of Texas, Rick Perry. When Newsom returned, he remarked, appreciatively, “They’re aggressive, we’re not. They know what they’re after, we don’t.”

Ten years earlier, in 2001, Texas’s G.D.P. was equal to about fifty-six per cent of California’s. By 2011, that figure had risen to sixty-seven per cent. After Newsom’s visit, the gap continued to narrow, and by 2013 it stood at seventy per cent. That year, Perry took out radio ads in California, telling business owners there, “Building a business is tough, but I hear building a business in California is next to impossible. This is Texas Governor Rick Perry, and I have a message for California businesses: Come check out Texas.”

California Governor Jerry Brown, a Democrat, dismissed the ad as “barely a fart,” but some observers assumed that he was only feigning nonchalance. By then, a narrative had been established about the states’ differing fortunes, thanks partly to Perry’s bid for the Republican Presidential nomination the previous year, during which he made much of the “Texas Miracle.” While California was struggling to recover from the recession, Texas was thriving. Along with faster G.D.P. growth, Texas boasted a much lower unemployment rate, and from 2009 to 2012 it was responsible for the most new business establishments in the U.S.—more than a fifth of the country-wide total—while California’s number fell. In October, 2013, Time_ _magazine published a cover article by the economist Tyler Cowen proclaiming that Texas represented “America’s future”; the accompanying illustration showed all the fifty states rearranged, like puzzle pieces, into the shape of Texas. Commentators chalked up the state’s success to factors like affordable housing, a business-friendly regulatory environment, and the lack of a state income tax. By contrast, California’s top income-tax rate and its housing costs were among the highest in the nation, and its business regulations—particularly those having to do with the environment—were seen as especially onerous and costly.

These days, though, no one is talking about the lessons California should learn from Texas. California’s economy is improving, and its budget is finally balanced—partly because of budget cuts and a voter-approved tax hike in 2012, and partly because the stock-market boom has translated into more tax receipts from California’s wealthiest residents (the ones with those high income-tax rates). These changes happen to come as Texas, the nation’s biggest oil-producing state by far, is grappling with a collapse in oil prices, which has depressed the price of a barrel of West Texas Intermediate crude oil to under fifty dollars a barrel for the first time in more than five years. It will be several months before the government publishes figures on G.D.P. and business creation for the period coinciding with the drop in oil prices, but already there are signs of trouble. Michael Feroli, the chief U.S. economist at JPMorgan Chase, said in December, “We think Texas will, at least, have a rough 2015 ahead, and is at risk of slipping into a regional recession.” The Texas budget, too, could be hurt by lost oil and gas taxes.

Brown, who was sworn in on Monday for a second consecutive term as governor of California (his fourth, including a stint from the late seventies to the early eighties), must have enjoyed a moment of schadenfreude if he happened to scan the Wall Street Journal_ _on his way to the inauguration. In an article on how the oil slump could hurt Texas, Jon Hilsenrath and his colleagues wrote, “Some Texans sobered by memories of past energy busts are bracing for a fall. The argument among economists and business leaders isn’t whether the state will be hurt, but how badly.”

The concerns about Texas’s fortunes speak to a misperception of the state’s recent boom, and of California’s bust. Texas’s outperformance of California had a lot to do with factors beyond the control of politicians like Perry and Newsom—namely, the importance of real estate to California’s economy, and the importance of oil to Texas’s. In 2008, the real-estate and rental-and-leasing sectors were responsible for about sixteen per cent of California’s G.D.P., almost double the proportion in Texas. So it was inevitable that California was hit harder by the housing crash that sparked the recession than Texas was. At the same time, Texas benefitted disproportionately from a rise in oil prices in recent years. Oil and gas extraction makes up about eleven per cent of Texas’s economy, compared with one per cent of California’s. In 2008, the year the recession began, the price of a barrel of West Texas Intermediate crude oil hit a record, topping a hundred and forty dollars a barrel; the price fell later that year, but it recovered relatively fast, reaching a hundred dollars again by 2011. Mark Muro, the policy director at the Brookings Institution’s Metropolitan Policy Program, told me that the recent natural-gas boom, coupled with rising oil prices, has been largely responsible for Texas’s growth, in G.D.P. as well as in employment and new business establishments, since the recession. The role of policy measures like low taxes and the light regulation of businesses was probably overstated, he said.

If all the booms and busts of recent years have taught states anything, Muro said, it’s that it is dangerous to rely too much on one industry for economic growth—especially if that industry is as volatile as real estate or oil. After the last time oil prices crashed, in 1986, bringing the Texas economy down with them, the state government made a point to broaden its economy into other areas. In the wake of the recent recession, the governor’s office and others claimed that Texas has successfully expanded into industries outside of the oil sector—especially the kinds of newer, fast-growing ones, such as tech, that have made places like Silicon Valley so successful. The Internet scene in Austin was particularly celebrated. “Texas has made a concerted long-term effort to build a broadly diversified economy that allows job creators from a wide variety of sectors and industries to thrive here,” Lucy Nashed, a press secretary for Perry, told me. She said that “will allow the state economy to weather the inevitable ups and downs of the economic cycle better than less diversified economies.” But, Muro noted, “The question is, given what is happening in oil and gas, how far along has that diversification proceeded in Texas?”

The simplest way to gauge Texas’s diversification is to look at the current percentage of G.D.P. from oil-and-gas extraction compared with the level prior to the last oil crash. In 1985, the year before the crash, about fourteen per cent of Texas’s G.D.P. derived from oil-and-gas extraction—three percentage points higher than the level in 2012, the most recent year for which data is available. That’s not a huge change, but it’s certainly significant. Muro and his colleagues at Brookings wanted to explore the nature of this diversification further, though, so they compiled a list of fifty “advanced” industries—the kind that invest a great deal in research and development, and that attract highly educated workers from science, technology, engineering, and math fields—and tried to find out where these industries are concentrated geographically. (Such industries are important because they tend to grow faster than more established sectors, pay high wages, and have long supply chains, which means their growth ripples into other parts of the economy.)