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From some of the elements of the content, the story appears to take place in the early 1970's. The references to Toots & the Maytals, the Trans Am (which first appeared in 1969), and the Bruce Springsteen lyric (first published in 1973) all appear to support this.
Geographically, the story could have taken place almost anywhere in the U.S.--most likely just outside of a suburban area.
The action of the story all takes place in and around Greasy Lake. In the second paragraph, we read the following description:
The Indians had called in Wakan, a reference to the clarity of its waters. Now it was fetid and murky, the mud banks glittering with broken glass and strewn beer cans and the charred remains of bonfires. There was a single ravaged island a hundred yards from shore, so stripped of vegetation it looked as if the air force had strafed it.
The description of the lake here is symbolic as it mirrors the transformation of the narrator and his two friends over the course of the story--from clear and pure to putrid and murky.
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