With the wildfire situation worsening and reaching Jasper, our thoughts go out to everyone affected and we join other Albertans in hoping that conditions improve quickly.

As of Wednesday afternoon, there were over 175 active wildfires in the province and some 17,500 evacuees (not including visitors to the Jasper area who had other places to return to).

The most significant impact is the human toll of the disruption and property loss.

We are monitoring the potential economic impacts. The situation is highly dynamic and we don’t have a complete picture, but we have some early indications and past wildfire seasons to go on.

Major energy producers have put staff on high alert and implemented emergency response measures. So far the actual impact on production appears minimal, but risks are elevated. Suncor indicated that it temporarily curtailed some output at its Firebag site. The situation on the ground is evolving, but some sources state that nearly 400,000 barrels per day (bpd) of crude oil equivalent are presently at risk based on proximity to major wildfires.

Last year, about 300,000 bpd of crude oil equivalent were offline for a period of time in May, primarily natural gas and natural gas liquids. Fortunately, conditions improved, and the disruption was relatively short-lived. Canadian oil and gas output (as measured by real GDP) fell about 4% in May 2023, but fully recovered by July. All in, the disruption to production was estimated to shave about 0.1 percentage points from Alberta’s GDP growth last year.

But the impacts could be much higher. The 2016 wildfires in the Wood Buffalo area provide an indication of the downside risk. The 2016 fires hit the major production center in Alberta’s oil sands region, temporarily shutting in more than a million bpd of oil production. That year the drop in oil and gas GDP was 15% in May. The estimated net impact to Alberta’s annual GDP growth that year was a reduction of 0.6 percentage points.

Outside of energy production and local business activity, a sector that will be deeply impacted by the current fires is tourism. Jasper National Park attracted 2.48 million visitors in 2023 including 475,000 last July. Around 25,000 visitors and residents have been forced to evacuate. The entire national park is under an evacuation order, which poses a significant threat for businesses such as hotels and restaurants operating out of the area and relying heavily on the busy summer months. The latest report is that the wildfire has reached the Jasper townsite, but the extent of the damages to property and infrastructure remain unknown.

We are keeping a close eye on the quickly evolving situation and will provide updates as we learn more.

Answer to the previous trivia question: There are six members of the Governing Council of the Bank of Canada: the Governor, Senior Deputy Governor and four Deputy Governors.

Today’s trivia question: In what year was the first Calgary Folk Music Festival held?