Engineering a Boom

Black Sunday

Legacies of a Failed Policy

And then, on May 2, 1982 - a day known on the Western Slope as "Black Sunday" - everything came to a catastrophic halt. Reckoning with falling oil prices that made oil shale no longer profitable, Exxon's board of directors announced that they would pull the plug on the Colony Project, effective immediately. The evening news delivered the first word most people in Colorado heard about it. Overnight the 2100 people employed on the project became unemployed, locked out and not even allowed to retrieve their personal effects when they showed up at the job site the next morning. The impact shot through the entire region, leaving everyone from construction workers to bus drivers to area business owners to appraise what a post-shale future might hold for them.

Battlement Mesa

An aerial view of the new town of Battlement Mesa under construction in Garfield County, Colorado, in August...

Other energy companies followed Exxon out of town, and approximately $85 million in annual payroll disappeared from the regional economy in just a few years. Many folks read the writing on the wall and didn't wait around to see what an $85 million vanishing act looked like, quickly deciding that there was no future for them on the Western Slope without the oil shale industry. Within a week of Black Sunday, a thousand people had left Garfield County. There were no more trucks or trailers left to rent.

The exodus continued as nearly 24,000 made their way out of Garfield and Mesa counties between 1983 and 1985 - diminishing the region's population to less than it had been before the boom - while unemployment on the Western Slope climbed from near zero to 9.5%. Young people departed in search of the wages and opportunities to which they had grown accustomed. Vacancy rates, once nonexistent, topped 14% in Grand Junction, and foreclosures in Mesa County increased from 98 in 1980 to over 1600 in 1985. Office buildings sat vacant. Businesses folded by the score. Banks that had survived the Depression now went under.26

Although a few companies did stick it out - Unocal and Occidental maintained their operations at limited capacity until the early 1990s, and several other companies, including Shell, continued research and development work on private sites - they were not enough to stem the tide of economic disaster. The oil shale bust triggered a regionwide financial collapse on a scale not seen even in most Midwestern steel towns.27

The first boom failed for lack of capital and inadequate technology, but the second failed primarily due to poorly considered policy. Although there was still no technological breakthrough that made oil shale development profitable, the federal government (with President Carter leading the way) engineered a boom in reaction to the perceived crisis of high oil prices and unstable suppliers. Energy companies followed the government's lead, responding to government incentives with major investments of their own. Oil money and federal subsidies pumped unprecedented amounts of capital into Shale Country during the 1970s and '80s, but it was not enough to purchase the necessary technological innovation (nor was it clear that such a breakthrough was available for purchase at any price). When oil prices normalized again, neither the government nor private industry could continue to justify sustained investment. Taxpayers and energy companies had spent untold billions with negligible returns, but the residents of the Western Slope bore the brunt of the failed policy's cost.

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