The economic fallout of the oil-production shutdowns in northern Alberta will likely be felt across the country, according to chief ATB Financial economist Todd Hirsch.
鈥淚 think a lot of people outside of Alberta don鈥檛 always recognize the size and scope of Canada鈥檚 oil industry. When it is not operating, and when its players are being hit this severely, this is a national issue,鈥� Hirsch told CTV鈥檚 Power Play.
At least nine major oil companies, including Syncrude and Suncor, suspended operations after a massive wildfire broke out near Fort McMurray last week, leaving Alberta鈥檚 oil production down by more than a million barrels per day -- half of the province's daily output and one third of Canada鈥檚.
On Monday, Prime Minister Justin Trudeau wouldn鈥檛 say what the impact would be on the federal treasury, or how much money the government has lost in oil royalties.
But most analysts have already slashed Canada鈥檚 economic outlook for the rest of the year.
鈥淎ll the stoppage of production will register as a hit to the national GDP and I think that will underscore the importance of the oilsands to the Canadian economy,鈥� Hirsch said.
World oil prices rose briefly in anticipation of the losses caused by the Alberta wildfire, but stabilized when the blaze missed the heart of the oil patch.
鈥淎t least there is no threat to physical energy infrastructure and the market seems to be responding,鈥� said Joe McMonigle, senior analyst for the Potomac Research Group.
Hirsch said the extent of the economic impact will depend on how soon oil companies can resume operations.
鈥淭his really could not happen at a worse time,鈥� Hirsch said, adding that the province is already running a $10 billion deficit.
Alberta Premier Rachel Notley is set to meet with industry leaders on Tuesday to discuss how to get oil production back on line.
'Enormous challenges' for local business
But not only will the oil industry bear the economic consequences of the devastating blaze.
Hirsch said local business in Fort McMurray will also struggle to get back on their feet as the city rebuilds.
鈥淲ith every additional day of lost revenue, those businesses are going to see enormous challenges,鈥� he said, citing a similar situation after severe flooding hit Calgary and parts of southern Alberta in 2013.
Many businesses in the city may also have been damaged or destroyed in the fire and will have to bear the cost of rebuilding.
And until damaged parts of the city are rebuilt, many Fort McMurray 90,000 residents will be out of work.
The province announced Monday afternoon that the wildfire, which now covers about 1,600 square kilometres, has destroyed 2,400 buildings in Fort McMurray. That means about 90 per cent of the city is still intact.
Crews are still working to put out hotspots and assess the damage caused by the wildfire.
Last week, the Bank of Montreal estimated the disaster could cost insurers as much as $9 billion in payouts.
Officials have yet to calculate the exact extent of the damage caused by the fire. But Hirsch the blaze will most likely affect require large payouts that will raise home insurance premiums from coast to coast.
With a report from CTV鈥檚 Richard Madan
