Hippie hang-out loses charm but keeps a dirty secret

There is a sinister undertow to the shimmering beauties of Avila Beach, a tiny speck of a town on one of the most stunning stretches of California's central coastline.

For years, it was a favourite hang-out of ageing hippies, of drifters, bikers and surfers, all of them drawn to the fine vistas of San Luis Bay and the almost total lack of commercial vulgarity. No McDonald's, and no Starbucks either.

But the town was also at the mercy of Unocal, the oil company best known for its ambitions to build a pipeline across Afghanistan, which pumped millions of gallons of crude each year from hillside repositories into tankers that docked at the custom-built pier.

Over the years, through inattention and poor maintenance, 400,000 gallons of oil slowly seeped into the ground, infesting the town, the beach and the lapping waves of the Pacific. Although Unocal sought to deny the truth when the ubiquitous black goo was first discovered more than a decade ago, the town was, in a word, ruined.

And then something truly extraordinary happened. Forced to face its responsibilities by endless lawsuits and lobbying by local campaigners, Unocal decided to dismantle the entire ocean front, house by house, paving slab by paving slab. The company then dredged the soil down to a depth of 30 feet, replaced the beach with brand new sand and then rebuilt the town from the ground up.

As they used to say in Vietnam - and are saying all the time in Avila Beach these days - the only way to save the village was to destroy it.

And now the new Avila Beach has risen from the wreckage. This summer, it is fully open for business again for the first time in five years. To the passing visitor it looks genuinely impressive: the new ocean front boasts a landscaped boardwalk, a path for in-line skaters and cyclists, a small children's playground on the sand and a sprinkling of refurbished restaurants and hotels. The surfers are back, and the beach itself looks pristine.

The locals, though, are not so sure that they like what Unocal has done. This is not the Avila of five years ago, the unpretentious, grungy holdover from a bygone era, but rather a boutique weekend getaway designed for affluent young couples from Los Angeles or San Francisco, which are both about four hours' drive away. That is certainly the way it is now being marketed, and the prices have risen accordingly. "The beach community that used to exist has been bought out or pushed out. What you see now is so different," said Matt Fleming, president of the local Surfrider Foundation, an environmental group interested in catching waves but also in keeping them as clean as possible.

"This used to be a very run-down beach town with a lot of character - little dives and old beachhouses. Now the yuppies have taken over."

Part of this reaction is obstinate resistance to the inevitable march of modern life: there is not much of the Californian coast that has not succumbed to a very similar gentrification. But part of it is born of sheer frustration at the way the central coast has been systematically taken over, exploited and abused by big energy companies without regard for the local population.

This stretch of coastline could easily have ended up as prized for its natural beauties as Big Sur 100 miles further north. Instead, it bears a legacy of oil spills and ground contamination, of effluent pumped into the ocean and marine life perishing as a result.

In Guadalupe, whose sand dunes stood in for ancient Egypt when Cecil B DeMille shot his original The Ten Commandments in 1922, Unocal is still mopping up the nine million gallons of diluent oil that seeped out of a pipeline over a 40-year period.

Morro Bay, a lovely old fishing town dominated by a vast free-standing rock overlooking its harbour, is blighted by a giant power station. And, just a few miles from Avila Beach, is the Diablo Canyon nuclear power plant, a hugely controversial project ever since it was first proposed in the 1970s, which hogs some of the area's most gorgeous rocky coast.

The energy companies first came into the area during the Second World War as a natural extension of the military- industrial complex built up around the ports of San Francisco and Long Beach. Avila Beach, for example, was a refuelling point for the Navy during the war. The area was sparsely populated and politically weak, which allowed Unocal, Chevron and others to muscle their way in without much trouble.

And now the price is being paid. Avila Beach is no longer used as an oil storage facility but its problems may not yet be over. Despite the clean-up, a further 63,000-gallon plume of oil has been detected beneath the pier and Unocal has been exempted from getting rid of it - mainly because of the prohibitive cost. And so the past lurks still, a dirty secret concealed from the children playing in the sand and the surfer dudes in their wet suits.