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$1 billion worth of oil sand production lost during Fort McMurray wildfires

The economic impacts of the wildfire that continues to burn in northern Alberta are starting to become clearer, with more than one million barrels of oil, per day, going offline.

The economic impacts of the wildfire that continues to burn in northern Alberta are starting to become clearer, with more than one million barrels of oil, per day, going offline.

Last week, it was also estimated that there had been about $1 billion worth of oil sands production lost due to the fire. Those numbers represent about 0.33 per cent of Alberta's projected GDP this year, and 0.06 per cent of Canada's projected GDP.

The drop is paired with a $65 million daily profit loss. And experts believe it could cause the Canadian economy to retract.

“We’re at the beginning of what is likely to be a very long process,” said Lakeland MP Shannon Stubbs, last week from Ottawa. She adds that MPs from Alberta have been trying to explain to other Canadian politicians the true scale of the devastation.

“We’ve asked for the government to present a plan,” says Stubbs, adding, she anticipates there will be some serious economic impacts in the region, which has already been hit hard by the economic downturn.

But, despite the dire economic impacts that may arise, Stubbs says she has witnessed many amazing moments, and says she has never been more proud to be an Albertan.

“What stands out for me is the way in which town and villages and hamlets and First Nations . . . have sprung into action . . . they haven’t waited for the government to say go or tell them what to do,” says Stubbs, who has been returning to the area on weekends and spending time at a number of the emergency reception centres located throughout the Lakeland.

“Albertans are clearly rallying around Fort McMurray,” she says, noting, that is the same response she believes the Liberal government also needs to demonstrate. And while the devastation that has occurred is almost unimaginable, it’s also seems balanced by the “love and compassion” that fellow Albertans, and Canadians, have shown.

One conversation that stands out to Stubbs through her time spent at the reception centres, is a discussion she had with an evacuee who had been working in the oil industry for a number of years.

People have asked how it could be possible that a city of more than 80,000 people could be evacuated in a fairly calm way, but in the opinion of the evacuee Stubbs spoke with, the reason was clear – many of the residents of Fort McMurray had some kind of safety training and experience in emergency management due to their employment in the oil industry.

There have also been conversations in Ottawa about the impressive response by the oil companies themselves, helping evacuate people and offer lodging when needed, but to Stubbs, this isn’t surprising. Many of the people who work with these oil companies are the same people who built the community of Fort McMurray, she says.

“It is remarkable. I’ve never been more proud to be from Alberta. But at the same time, it’s not remotely surprising.”

St. Paul-Lac La Biche-Two Hills Wildrose MLA David Hanson also weighed in on the current situation, and the long-term effects of the Fort McMurray wildfire. He says his focus is on getting people back to work once it’s safe to do so.

“We’ve had enough hits to the industry this year.”

He says that although some oil companies had decided to continue paying employees, there are still a number of contractors who are affected by the loss of work, and many of those contractors come from northeastern Alberta.

One area of concern for Hanson has to do with rumours that there are people coming in from eastern Canada and outside the province in general, to do some of the restoration work in the City of Fort McMurray.

The Wildrose feels that Alberta companies should be taking the lead on the restoration efforts. Hanson says he has been getting calls from a number of people concerned about this topic.

“It’s very frustrating for the people up there,” he says. But, the number one priority is getting people back to their homes, and the June 1 projected date for allowing some residents to go back will come quickly.

Hanson says that he is also very impressed and proud of how his riding responded to the evacuees who have been staying in the area.

“The loss . . . erodes Canada’s oil reserve and presents a potential supply risk to several key refineries from Edmonton to Chicago that could in turn see shortages in gasoline output,“ said GasBuddy Sr. Petroleum Analyst Dan McTeague.

As of Monday (May 16), prices had risen 3.1-cents per litre across Alberta and 2.4-cents per litre across Canada.

According to McTeague, prices around this time of year are unpredictable.

In 2015 gas was 97.20 c/L. It was 2014 it was 122.30 c/L, 116.32 c/L in 2013, 113.88 c/L in 2012 and 121.15 c/L in 2011.

“We’re already starting to see those prices make their way up slowly but surely,” said McTeague. “I think it takes a while for these facilities to come back online.”

He added, “The Canadian Association of Petroleum Producers press conference (on May 10) suggested a slow but deliberate setting up to play a bit of catch up.”

With fires hopefully moving past Fort McMurray, gas prices can stabilize. While they will climb with the summer season, where more motorists are out on the roads, it shouldn’t be anything drastic.

“Supplies of gasoline are much better than last year, which should keep a lid on gas prices which stand several cents a litre lower than last year at this time.”

“The oil industry of Fort McMurray hasn’t been hit as hard as the City of Fort McMurray,” said Bonnyville-Cold Lake MLA Scott Cyr. “The big concern here is to actually make sure we focus on getting residents back into Fort McMurray so that we can get the people back to work, which will end up getting our oil industry back on its feet.”

Many Fort McMurray evacuees however have lost their homes. An estimated 2,400 structures were lost to the fires.

“From my understanding, Fort McMurray has had a very high vacancy rate within Fort McMurray. So I’m hearing that a lot of Fort McMurray will be able to absorb the people out of their homes. As long as they have a place to live we’ll be able to get them back to work again,” said Cyr.

Close to 90 per cent of city infrastructure remains, including the city’s hospital, municipal buildings and schools.

McTeague suggested the fire’s hit to the oil market is a wake up call to Canadians about the reliance of the economy on oil.

“The bank suggests (the slow of Albertan refineries) might have a negative one per cent hit to the Canadian economy. That’s how drastic the effect has been,” said McTeague. “The second quarter was going to see a growth of a per cent. Now at best it will be neutral. It’s sobering for Canadians because it effects our pensions and sustains our prosperity.”

The consensus is the faster Fort McMurray can get back to work, the better.

“This isn’t going to happen overnight, but the resolve by Albertans to get back online quicker than anticipated is a bold and direct message to the world that Fort McMurray is coming back online and is back in business,” suggested McTeague.

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