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article imageOilsands shutdown spurs fear and uncertainty for Canada's economy

By Karen Graham     May 7, 2016 in Business
Calgary - Alberta's hard-hit economy has been dealt another blow as uncontrollable wildfires continue to rage around the province's oilsands, forcing the oil industry to curtail production.
The apocalyptic wildfire raging in northern Alberta is now expected to double in size today, expanding into the remote forested areas northeast and away from Fort McMurray, reports ABC News.
The fire has already had a severe economic impact that is reaching far beyond Ft. McMurray and its citizens. With the necessity of evacuating the oil camps to the north of the city, thousands have found their jobs on hold as oil production has slowed down by as much as one million barrels per day, according to Vice News.
The loss in oil production is forecast to cut Alberta's daily output by almost half. The province produced about 2.5 million barrels per day in January and February, according to The National Energy Board of Canada. By Thursday, the reduction in output had already helped to drive up global prices, reports the Wall Street Journal.
There are real worries right now that the raging wildfires and the slowing or in some cases the temporary halt in production will nearly wipe out the world's over-supply. To add to the gloomy picture, CTV News is reporting the Bank of Montreal on Friday, partly in response to the wildfires, lowered the country's growth projections for the second quarter from 1.5 percent to zero.
"There's just so much uncertainty around this, how much production shut down, what the extent of the damage is, what other sectors that may also be impacted -- we're not sure about that yet,” BMO senior economist Benjamin Reitzes told CTV News.
But while looking at the impact caused by a slowdown in oilsands production is relevant to the economic picture, the wildfires are going to impact the lives of Canadians for a long time. The estimated payout by insurers for homes and businesses destroyed in the fire are in the neighborhood of $9.0 billion. And there is no telling how much the psychological impact of this disaster may end up costing because it's just too early to tell.
Todd Hirsch, Chief economist with ATB Financial, told Vice News, "Think about what kind of society you want to live in, and if you ever got hit with this shock, what would you hope the rest of Canadians would do for you in the long term — not just in the next couple weeks."
More about alberta wildfires, Alberta oilsands, world's oversupply, price of oil, Insurance companies
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