PINEDALE, Wyo. (CNNMoney.com)  — The United States is in the midst of one of the biggest domestic oil drilling booms in recent history. High prices and better technology mean that previously inaccessible energy reserves across the nation are ripe for exploitation.

Places like North Dakota, New York, Tennessee and Kentucky, not generally associated with the oil and gas industry, are getting a taste of what it’s like to have major oil and gas development in their back yard – the benefits and the headaches.

As states across the country grapple with this new drilling, Wyoming – which has been drilling for oil and gas for over 100 years and is currently in the midst of a huge boom itself – can offer a window into the lives of people impacted by this necessary but controversial industry.

While money from this boom is literally overflowing Wyoming’s government coffers – there’s no state income tax, nearly every college bound student is getting scholarships and communities pay cash to build schools and recreation centers – many residents wish that the rate of progress could just slow down.

Traffic clogs once quiet streets. Rents have skyrocketed. Contaminated drinking water and mysterious illnesses – which some say result from lightly regulated drilling practices in the state – have made people in Wyoming nervous. It’s not that people want the drilling to stop, they just want it to slow down – and they want it done right.

“I like to have heat and fuel just like everyone else,” said Jeff Locker, a 54-year old barley farmer living near Pavilion, a town of 165 people in the Western part of the state. “But they need to strengthen the regulations and oversight. No one checks what these people are doing out here.”

Locker says he’s now paying the price for that lax oversight. He and several of his neighbors say the drilling has contaminated their water.

These aren’t tree-hugging Wyoming transplants. These are people like Louis Meeks, a disabled Vietnam veteran from Riverton, Wyo., who bought a house near Locker 30 years ago.

“We were planning on staying here [to retire], now I’d like to get out,” said Meeks.

But as he filled a tub with water from his well, a rainbow sheen like an oil slick appeared on the surface. The water smelled like gasoline. It was clear that Meeks – who now gets his drinking water trucked in – is going to have a hard time selling his house.

“These guys are going to leave with their bag of money, and leave us high and dry,” he said. ‘It ain’t right.”

John Fenton, a 36-year old hay farmer living up the road from Meeks is also angry with the drilling.

Fenton farms 200 acres that have been in his family for generations. But like many landowners in the West, he doesn’t own the mineral rights beneath his property. So now at least a dozen natural gas wells have sprouted up in what is essentially his front yard.

His wife periodically loses her sense of taste and smell, while his 11-year old son suffers epileptic seizures. Fenton says the energy companies don’t properly capture the fumes that come from the wells.

Meeks and Locker also say family members have come down with debilitating aches and pains, and blame it on the gas wells – although they freely admit establishing a concrete link between the industry and their illnesses is very difficult.

Even establishing the source of Meeks’ water contamination is difficult.

A spokesman for EnCana, the Canadian energy outfit that owns the well near Meeks’ house, said it’s bacteria, not the oil company, that’s responsible for the contamination. Hydrocarbons like oil or diesel fuel, they say, have not been found in the well.

Each side has independent tests supporting their claim, and the state’s Department of Environmental Quality is still trying to get to the bottom of it.

The environmental issues go beyond the water. Further west from Pavilion lies the considerably larger town of Pinedale – population 1,412.

Pinedale is rustic old cow town lying just west of the chiseled Wind River mountain range. The town has one main drag, a handful of bars and restaurants, no stop lights, and a booming natural gas industry.

Along the plateau east and south of town lies some of the country’s most prolific natural gas production, accounting for 3% of what is produced in the U.S.

Most of it is sent to California – a state fighting to reduce its greenhouse gas emissions – for electricity production, cooking, or heating homes. Because it is cleaner than coal, and abundant domestically, natural gas has become one of the most important fuel sources for this country.

But while there are ecological benefits to burning natural gas for the U.S. as a whole, Pinedale is paying a price.

For five days last year, Pinedale had air quality that rivaled the city of Los Angeles. The trucks, drill rigs, and gas-gathering equipment in the oil fields themselves are spewing tons of pollution into the otherwise clean Wyoming air.

“When the ozone alerts came, the DEQ advised us to no go outside and recreate,” said Linda Baker, a coordinator at the environmental group Upper Green River Valley Coalition. “And we’re in one of the outdoor recreation capitals of the world.”

The agency that governs oil and gas leasing on federal land in Wyoming, the Bureau of Land Management, says air quality is one area where regulators dropped the ball. And Chuck Otto, the BLM’s field manager in Pinedale, says the agency certainly could use more staff.

But overall, he thinks regulators and the industry are doing a good job balancing the need to develop this domestic energy resource and protecting the environment.

“Would I rather see rolling sage brush with elk and deer, yes,” says Otto, a career BLM man who got his start wrangling horses. “But the companies are trying to do a very good job updating their equipment, and we have to accept the realities that we need the energy here.”

EnCana, which has big natural gas leases on land near Pinedale along with BP, Shell and a handful of other companies, is putting their drill rigs on giant wooden pallets in an effort to protect the sage brush. The company says it is also running its drill rigs on the cleaner burning natural gas, and working on a central gas gathering system that will reduce air pollution.

The company recognizes its impact on the environment and the difficulty it has in balancing our energy needs with its ecological responsibility.

“People want it all, they want it in abundance, and they want it at a reasonable price,” says Randy Teeuwen, a spokesman for EnCana. “But they assume it comes from a plug in the wall. They don’t want to know the details of how it gets there.”

Because the drilling has fragmented the habitat for mule deer and sage grouse, wildlife officials have noted a decline in their population.

In addition to the environmental issues, the influx of people drawn to work in the natural gas fields – many from Texas and Louisiana – has created a bevy of social problems in towns across Wyoming.

Statewide, drunk driving arrests jumped nearly 10% in 2007, and several reports have noted a rise in the use of crystal meth, a stimulant which some have tied to the 12-hour shifts common in the oil and gas fields.

In Pinedale, a one-bedroom apartment can go for $1000 a month, a stretch for anyone not making $60,000 a year in the gas fields. Local business are struggling to find workers.

“It’s hard to get people to stay because the oil industry pays so much,” says Pat Schwab, 50, pouring drinks on a Monday night at the Cowboy Bar, a main street watering hole often filled with gas field workers.

This night was slow – maybe a half dozen people in the bar. But Schwab also works Fridays when the bar is packed with young working men looking for a good time. On Fridays she also flies solo – no bouncer, no dishwasher, no one to back her up in case there’s trouble.

“You can’t find help in this town, so when you’re slammed, you go it alone,” she says.

Shane Thomson, owner of the Half Moon Motel just off the main drag, also says it’s hard to find help. He pays his housekeepers $10 an hour, plus provides them a free place to stay. But for Thompson life would be easier in Pinedale if the energy development was more measured.

‘It would be nice if they could slow it down a bit,” he said, echoing the feelings of many others in town. “It seems to me like they’re trying to push it through all at once.”

For other states facing or soon to face the oil industry, the main advice people in Wyoming have is to be proactive. Set up a natural resource tax that can fund schools, roads and health clinics, and get some state money to do it before the workers pile into town. Make sure the environmental rules are up to snuff, and the state has the manpower to enforce them.

And most of all, make sure the industry’s plans, the the town’s preparations, are all known to the public.

“A lot of these things happen without the involvement of the common person who goes to work eight hours a day,” said lifelong area resident Sara Domek, 23, having a drink in the town’s eco-minded coffee shop. “And then there’s a new drilling rig right behind their house, and they’re wondering why.”