On Wednesday May 4 in the idyllic Canadian town of Fort McMurray, nestled in the heart of Alberta’s oil sands, a forest fire spread to uncontainable proportions after a sudden change in the wind direction allowed the blaze to jump a river and encroach upon the town’s residents. With the exception of a few areas saved by the “Herculean efforts” of local firefighters, the town was engulfed in flames within a few hours, and its residents and those in the surrounding areas were evacuated. Reports suggest that around 80,000 people have been evacuated so far. Incredibly, there have been no reports of serious injuries or fatalities at this time.
How the fire spread. Source: CBC News
Authorities have suggested that the fire was caused by climate change, with unprecedented high temperatures and humidity having left the area like a tinderbox. Dale Bendfield, a representative of the Regional Municipality of Wood Buffalo reported another two fires in the area, while a thunderstorm to the east of the stricken town has been the cause of several lightning strikes. Across Alberta, there are 296 firefighters working to combat active blazes. In true Canadian style, the surrounding area is scrambling to offer aid and the oil community is pitching in with evacuation efforts, with work camps in the area having taken in around 10,000 evacuees.
Oil constitutes an important industry for Alberta, and it holds the position of the largest producer of conventional crude, synthetic crude, and natural gas in the country. The province’s Athabasca River region holds the second largest volume of proven reserves in the world, coming only after Saudi Arabia. Reuters has calculated that, due to the disaster, at least 640,000b/d of crude output (16% of Canada’s production) is now offline. Several companies have closed down or reduced operations in order to guarantee worker safety, with Shell Albanian Sands and Suncor shutting down completely in the region, while Syncrude reduced its workforce.
These factors, in addition to the political unrest in Libya, caused oil prices to jump today after a week of continuous falls, as concerns over supply grow. Although Nitesh Shah of ETF Securities believes that the oversupply will turn into a deficit by Q32016, the discovery earlier this week of higher than anticipated US oil reserves makes many analysts skeptical.