Sam Kapourales thinks he is living the American dream -- "sitting 50 miles away from civilization right on top of a billion dollars" -- and he cannot understand why it never quite comes true.

Kapourales runs the drugstore and serves as part-time mayor of this little town on the Kentucky-West Virginia border. Coal dust wafts through the air as far as Kapourales can see -- a fine mantle of black richness that clings to the hickory trees as well as the railroad tracks, and coats faded company-town draperies as well as miners' lungs with the same tenacious certainty.

This rail hub and mining town sits far down twisting, two-lane mountain roads in the center of one of the richest coal fields in a world strangling on an energy shortage. Outside town, the veins run several feet thick beneath 100 tiny Appalachian hamlets with names like Man and Justice or Keypatch and Bear Wallow.

"There's enough coal around here to mine it till your grandchildren have grandchildren," Kapourales says. But his voice is almost plaintive. All he reads about in the papers is an energy crisis, but America is not stripping its own black gold out of his hills the way the Arabs are pumping theirs out of distant deserts.

So instead of a billion-dollar bonanza for this little town carved out of the cliffs of West Virginia, Williamson is gradually losing population. The town is down to 5,500 from a peak of 8,000 in the 1950s, when King Coal was riding high.

Unemployment, while not quite rampant yet, is running a point or two above the national average in this recession year.

And downtown businesses, struggling to pay off $30 million in federal disaster loans from a 1977 Tug River flood that left the town under 10 feet of water, are scratching to make it.

Like most American recessions -- and perhaps most old American dreams -- the bad times in Williamson are fraught with contradictions.

Miners, if they are working, have never had it so good. Wages have tripled to more than $20,000 a year in the past decade. And the sons of the men whose ghostly black faces peered out of newsreel screens during the head-knocking John L. Lewis strikes of the 1940s are Little League fathers now, driving big Detroit cars with bumper stickers that ask, "Why Not Coal?"

Coal prices, rising parallel to oil, are up sevenfold.

Kapourales' billion-dollar dream -- visitors are welcomed to town by a sign that tells them they are entering "The Heart of a Billion-Dollar Coal Field" -- is more than boosterism. In post-OPEC prices, the value of coal around Williamson ranges upward in multiples of a billion.

"It should be time to catch the golden ring," Kapourales says, shaking his head that Island Creek has shut down two of its larger mines instead, laying off 600, and other companies like U.S. Steel are cutting back to short work weeks.

The townsfolk here blame their problems on everything from the auto recession to the lingering effects of a 111-day United Mine Workers strike that sent coal buyers scurrying away from Appalachia into the western coal fields two years ago. And they blame everyone from President Carter to the environmentalists.

But E. E. Maynard, the Mingo County prosecutor, says the reasons go far deeper. West Virginia coal production was up last year but, even then, the amount taken out of these hills was 50 percent less than in the peak year when coal was really king, in 1947.

"The country just moved away from coal," Maynard says. "I blame the government for keeping the price of oil artifically low so long. Now we're having trouble moving back, getting the system to absorb coal again.

"We've been driving around in Cadillacs, burning oil as fast as we could, while the rest of the world was poor. That just couldn't last, and the rest of the world is evening things out now. In the long run, the Arabs are doing us a favor.They are making us wake up -- and they are also driving up the price of all that coal we've got out there."

Still, the fact that the high cost of oil also was depressing the steel industry and drying up the short-term market for coal, was just one of those modern Catch-22s that people in this isolated part of Appalachia have learned to write off.

There are a lot of Catch-22s up here where the golden ring, the American dream realized, always seems to be just beyond reach.

Richard Jude, a rawboned 23-year-old from across the river in Kentucky, thought he had the ring in hand when he completed six years underground this summer and his wages topped $80 a day. But then Jude's job dried up at the Shoestring Coal Co. -- Jude doesn't even crack a smile at the name -- and he has been an unemployment statistic since.

Jude stood in front of the little Smith Brothers Mine outside Williamson, the 17th mine he had visited since 8 a.m., and wistfully watched the 4 p.m. shift change.

"Something's wrong with this country," the young Kentuckian said. "The government makes it sound like we're being patriotic out here digging coal. But the coal companies look at me like I'm some kind of welfare case. I can do anything there is to do down there and they all say they don't want me." c

Inside the mines' construction shack office Dwight McCoy ran his eyes quickly, very quickly, over Jude's application and then stuffed it in a box "just in case the unemployment office calls." He has 56 men working, none about to quit, and he gets twice that many applications each month.

At his drugstore's fountain counter Mayor Kapourales reads the newspapers wryly every time another Arab leader sitting on an oil field half a world away in someplace more obscure to him than Bear Wallow visits Washington and leaves with a new fleet of warplanes.

Kapourales, sitting on his own mother lode, has been to Washington six times in the last 18 months trying to get a flood-control project to defend his town from the Tug River. He hasn't got it, and that tells him the outside world "is plenty screwed up, just plenty screwed up."

Across Second Avenue "Coal Miner's Daughter" is playing this week at the town's only movie hall, the Cinderella Theater.

The aging marquee draws in the crowds with a teaser that folks understand in the coal country: "She was married at 13. She had four kids by the time she was 20. She's been hungry and poor. She's been loved and cheated on."

But "Coal Miner's Daughter" is a success story. It's about a girl who rose up out of the coal dust, caught the golden ring and lived the American dream.

The movie has been playing to lines even longer than those at the unemployment office.