We’re not anywhere we haven’t been before
Glenwood Springs, CO Colorado
When things get really chaotic in the economy, to get anchored it’s sometimes necessary to refer to that great American economist, Yogi Berra.
In this instance, the operative quote is, “It’s dejà vu all over again.”
A couple of years ago, Western Slope banks had plenty of money and healthy capital cushions. They were high on their own supply as bankers elbowed one another to lend on building projects fueled by the booming natural gas industry. When things started to go sour for the rest of the country in 2007, we blithely thumbed our nose at the rest of the country and basked in the rays of our red hot economy.
Now, new wells are few, natural gas production is ratcheting down as demand falls. New fields, most notably in Pennsylvania, are coming on line. New subdivisions from Silt to the Utah line are languishing, and vacancies abound. To hear us wail, you’d think it hasn’t happened before.
But of course it has, for at least 150 years. The economy was pretty stable when the Utes ran things west of the divide, but it hasn’t been since the new owners took over. In the early 1880s Leadville was the second largest city in Colorado. Aspen was on its way to becoming a small metropolis, and scores of other boom towns and mining camps were thriving as silver was clawed from the Rockies. Men like H.A.W. Tabor and Jerome Wheeler figured it would last forever, or at least as long as they lived.
It didn’t. The country went off the double standard, the price of silver plummeted, business and banks failed, and the silver magnates became paupers overnight.
The first oil shale boom took place as World War I wound down and lasted till about 1925. Geologists determined that there were a gadzillion barrels of oil trapped in rock on the vast Colorado Plateau. Companies were formed, leases bought and sold, but the frenzy subsided when everyone realized that it was vastly cheaper to pump oil out of the ground in Texas than to squeeze it from rock in Colorado.
At the close of World War II, a couple of booms were waiting in the wings. The U.S. Bureau of Mines built an oil shale “Demonstration Plant” between Rifle and what was then Grand Valley (now Parachute). As a kid growing up in Rifle, I remember hearing that there would be just one big city between Rifle and Debeque.
At the same time, around 1950 the proven uranium deposits in western Colorado and eastern Utah were sparking a prospecting frenzy that harkened back to the days of the big silver strikes. Grand Junction became the business center for the new boom, and hardbitten miners, like Charley Steen, became millionaires overnight, back when a million was a lot of money. A horse race track was built in Grand Junction and named Uranium downs.
But the price of the ore dropped, because the Atomic Energy Commission could only stockpile so much of the stuff, and Charley Steen and others died broke, and the track was torn down.
The next oil shale boom, in the late ’70s, was one of the biggest of its kind the Western Slope has seen, and, at the same time, the most puzzling. At least silver and uranium were actually being mined and sold. The boom that ended on the famous Black Sunday of May 2, 1982, was based on no more than the promise of a multi-national corporation.
Exxon said it was going to create the largest oil production infrastructure the world had ever known, and the whole country enlisted to build houses, shopping centers, apartments and offices to support that infrastructure right here in River City which was projected to stretch from Grand Junction to Glenwood.
On April 28, 1982, at a regular meeting, Exxon’s board voted to close down the project, and western Colorado was shocked – shocked – to learn that you can’t trust the word of an oil company.
Will we ever learn? Probably not. There’s a perception that bankers are pessimists lending to optimists, but it’s a myth. The highest rolling Las Vegas gambler doubling down at the craps table can’t compare to a banker when there’s boom in the air. We’re like Charlie Brown perennially believing the football will be there when we run up to kick it.
But, on a brighter note, fortunes are made when the bubble bursts. Entrepreneurs who buy up property at cents on the dollar exponentially increase their investment value in a few years.
Will there be another boom? Almost certainly. Will it be followed by a bust? Guaranteed. Will we remember how much it hurt last time? You’ve got to be kidding.
Pat Dalrymple is a valley native. He’s been in the mortgage and banking business since 1961. He’ll be happy to answer your questions or hear your comments. His e-mail is firstname.lastname@example.org.
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