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The push for federal protection of the dunes sagebrush lizard -- a tiny 3-inch reptile -- is causing big headaches for oil drillers and ranchers who say doing so will kill their livelihood.

Oil company owners say they support conservation, but fear what will happen to the economy if the brakes are put on local oil production.

“This could cripple what is now a very healthy job environment,” said Douglass Robison, president of ExL Petroleum in Midland, Texas.

The dunes sagebrush lizard lives off of a shrub called shinnery oak in the Permian Basin, which cuts through New Mexico and West Texas -- and is also one of the richest resources of oil and gas in the United States.

Environmental groups say that oil production has destroyed much of its shinnery oak, which has led to a dramatic decline in the lizard’s population.

Conservation groups that want the reptile added to the Endangered Species List are pointing to a new study by the Center for Biological Diversity showing that the reptile’s habitat is so small that protecting it won’t impact drilling.

“[The dune sagebrush lizard] exists on less than 1 percent of the land proposed during the study,” said Jay Lininger, an ecologist with the Center for Biological Diversity who conducted the study.

Lininger based his study on the land leased to oil and gas companies by the Bureau of Land Management and found that 5 percent of nearly 53,000 acres offered for lease since January 2010 included habitat for the lizard.

But Rep. Mike Conaway (R-Tex.) disagrees with the report done by the Center for Biological Diversity. “They have seen 1,000 drilling locations that would be potentially inaccessible,” he said.

“They have only looked at 1 percent out of potential habitats,” he said. “The science is weak,” he added. He says giving the dunes sagebrush lizard federal protection status wouldn’t be threatening just Texas, it would be damaging to the entire United States because of less domestic drilling, resulting in higher gas prices.

Rep. Steve Pearce (R-N.M.) said if the lizard ends up on the list, it would shut down any industry that interrupts the land, including oil drilling and ranching. “Almost every job [in the counties] is at risk,” Pearce told FoxNews.com. “Workers will have to go someplace else.”

The Center for Biological Diversity and another conservation group, WildEarth Guardians, says Pearce’s claim that the oil and gas industry would be devastated is blown out of proportion.

Lininger said the lizards are at great risk. “The science is clear that the species require protection now.”

In October 2001, the lizard was added as a candidate to be listed as endangered. Under the Bush administration a decision was delayed, but last year the lizard moved up the list.

Charna Lefton, spokeswoman for the U.S. Fish and Wildlife Service, said that since 2008 dozens of oil and gas companies have proactively made volunteer conservation agreements with private land users in New Mexico on how to use the land indefinitely without disrupting the lizard or its habitat.

The agreement includes an analysis of what chemicals are being used on the land, where oil drills are being placed, and the location of where ranchers keep their livestock.

Permian Basin Petroleum Association president Ben Shepperd said they are planning to do the same in Texas and are working with the Texas Parks and Wildlife and U.S. Fish and Wildlife Service to develop similar agreements.

But he says that oil industry advocates still feel caught off guard about the regulation.

“We were blindsided. We had no idea anything was forthcoming until December 2010,” said Shepperd.

Over the months, the U.S. Fish & Wildlife Service conducted public hearings on the issue, and on Monday closed the period for public comments.

“We understand people have legitimate concerns,” said Lefton.

A determination if the dunes sagebrush lizard will make it on the Endangered Species List will happen by the end of the year.