How energy boom can turn into bust
Parachute, Colo. — ''BUST!'' screamed the banner headline of the Weekly Newspaper, a small publication serving the oil shale region.
Much has been written on the Rocky Mountain energy boom. But Exxon's pullout from here illustrates the other side of the coin--the bust that has invariably followed each mineral boom throughout the West's history.
There was little warning of Exxon USA's announcement that it would mothball its Colony oil shale project, the flagship of the fledgling synthetic fuels industry. Many local businessmen had been building houses, hotels, restaurants, and new stores in anticipation of major increases in the area's population. Now, they're reading economic disaster into Exxon's move.
''I lost a million bucks on Exxon. I worked awfully hard for that money. I don't have another million. So I ask you, can I trust Union?'' laments Pierre Barthelemy, who owns a local industrial park. (Union Oil of California has said it will contine with its oil shale project near here.)
Exxon's action involved ''either an absence of planning or an absence of honesty. Take your pick . . . we feel like we've been fired without notice, too, and we want to know why,'' says Phil Schick, head of the Rifle, Colo., Chamber of Commerce.
Many people in parts of the country suffering severe economic hardship may look to the West's energy-related prosperity with increasing jealousy.
Westerners have welcomed this new source of economic prosperity, but with caution. They realize how quickly prosperity based on an extractive resource can disappear, and what happens once the resource is gone. The ultimate reminders are ghost towns. The Rockies are littered with them, as well as abandoned mines and factories, scarred mountainsides, orphaned mill tailing piles, and half-deserted communities where people barely eke out a living. All these speak too eloquently of forgotten hopes and past prosperity.
Feeling that they have been treated like a resource colony of the East in times past, Westerners have vowed to do what they can to keep from repeating this pattern. As a result, a regional energy debate is brewing on Capitol Hill that some congressmen believe could be the most divisive issue since the Civil War.
Into this volatile political stew has been mixed the economic bust in western Colorado that appeared almost overnight with Exxon's announcement. The action came as a profound shock to residents in the area, most of whom live in the small towns nestled in the Colorado River valley, in the shadow of eroded, shale-bearing cliffs.
For the last few years, energy development has largely insulated this region from the economic hardships endured by many other parts of the country. Although interest rates have been high here, unemployment has run at only a fraction of that in the industrial Northeast.
But prosperity has had its cost. In the small western towns where energy development invariably occurs, prices have skyrocketed, housing shortages have become acute, and longtime residents unaccustomed to such problems have to cope with traffic jams and major increases in crime.
Now, with startling swiftness, this picture has changed. The oil shale industry employed 4,200 workers here last fall. The Colony closure means that half these jobs will be lost. To a certain extent this will be offset by a gradual increase of 700 workers on the neighboring Union Oil Company of California's shale oil effort. But coal mines nearby have also laid off about 500 workers. Figuring one support job for every primary job, this translates to a total of 3,800 jobs ultimately lost. That may not sound like much, but it is significant when one considers that the total work force in Garfield County, where the Colony project is located, is only 12,600.
The Colony project's saga is an all too familiar story here. Old-timers in the area have seen a railroad boom and bust, a uranium boom and bust, and a coal boom and bust. The changing fortunes of oil shale alone have produced great expectations, and then shattered them, twice before. This is one reason why this area has emerged as the most politically distinct in the country.
''In the Rocky Mountain states we have found the most unique and separate set of perspectives of any place in the country,'' says pollster Peter Hart. While the agenda of concerns for the rest of the nation is unemployment, education, and taxes, for the intermountain West it is environment, water, and energy-related growth, his surveys find.
Residents and officials here see energy development as a way to break out of the boom-and-bust cycle. Local officials have been demanding with increasing militancy that the companies involved, the state, or the federal government help provide the schools, roads, utilities, housing, and extra policemen that the influx of energy workers makes essential.
Several states have slapped hefty severance taxes on energy minerals to help deal with the problem of energy boom towns as well as to use in efforts to diversify their economies.
''Progress must pay its own way,'' says George Mitchell, mayor of the town of Rifle, Colo.
As the nation's economic conditions have worsened, however, these demands have become increasingly unacceptable to Eastern politicians.
Representatives from energy-poor states complain with greater and greater bitterness that they are forced to pay tribute to their energy-rich brethren. They worry about the massive transfer of wealth, estimated at more than $200 billion during this decade, from their states to the energy exporting regions in the US.
Westerners counter with impassioned speeches about colonization.
''Westerners view energy development with a healthy mixture of optimism and pessimism. But we are unwilling to be dominated by what we call 'outsiders,' '' declared Montana Gov. Ted Schwinden (D) recently. To illustrate, he noted that the Hope diamond was bought and worn in New York but was paid for with money from Montana copper.
Many people here say the abrupt way Exxon's board of directors pulled the plug on Colony is the latest example of the callousness of Eastern corporate managers and of the dangers of outside economic dominance.
''They came in the wrong way, they left the wrong way, and it's going to make it harder for the rest of us,'' says a representative of another energy company active in oil shale.