An Oil Town Up In Smoke

Introduction

Our love for the humble automobile has created an insatiable demand for petroleum products. Gasoline, diesel, oil, lube, plastic—almost every component on a car depends on the existence of petroleum in one way or another. As a result, it’s not uncommon for cities to pop up in spots that happen to contain a lot of oil. Dubai, Kuwait City, and Williston, North Dakota are all textbook examples of so-called “oil towns”, cities that have bloomed because of the presence of oil in the area. But one of the more notorious oil towns is currently going through a Herculean struggle with mother nature, one that they appear to be losing to badly. Even when the smoke clears, the long-term effects of the disaster could bring even further instability to an already volatile oil market, affecting the prices of just about everything car-related.

The Syncrude project near Fort McMurray, Alberta. Canada's largest oil project.

The Syncrude project near Fort McMurray, Alberta. Canada's largest oil project.

About the Area

Nestled in the thick, remote Canadian boreal forest is the unlikely metropolis of Fort McMurray, Alberta. While the surrounding area is, by and large, thick wilderness, and the nearest communities are hours away, Fort McMurray is the 5th-largest city in the Canadian province of Alberta. The economy there, and for much of western Canada, is driven by the oil and gas sector. Much of the population consists of oil workers who came from all over Canada to cash in on the oil boom. The city is often nicknamed “Fort McMoney”, because the wages for oil workers can be as high as Snoop Dogg himself.

A sign welcoming visitors to Fort McMurray.

A sign welcoming visitors to Fort McMurray.

In the forests surrounding Fort McMurray lies one of the largest oil deposits in Canada. However, unlike, say, the Middle East, you can’t just drill a hole in the ground and bring up oil here. The oil lies deep in the ground in the form of “tar sand”, which is essentially just asphalt. The sand is rich in petroleum, but must be refined heavily in order to produce a barrel of oil. Thus, producing synthetic crude oil wasn’t all that practical or profitable. Then the oil crisis of the 1970s, and, later, $40+ barrels of oil in the early 21st century, made the tar sands a profitable proposition. In both cases, Fort McMurray experienced a population boom. The population is currently estimated to be around 90,000 people, including temporary oil patch workers from abroad.

Aerial view of Fort McMurray.

Aerial view of Fort McMurray.

Downturn

Like many “oil towns”, the economy and welfare of the community is tied to the oil markets. This is especially true in Fort McMurray, due to its relatively remote location and lack of supporting economy. It is a 4-and-a-half-hour drive from the nearest major city of Edmonton, and is surrounded by little more than oil operations and wilderness. Therefore, the cost of living is quite a bit higher than in the rest of Canada. When the price of oil collapsed in 2015, the oil companies were no longer turning a profit, and many had to shut down operations. This laid off thousands of workers, and left many Fort McMurray citizens with nowhere else to go. As a result, hard times befell the community, along with the rest of the largely oil-driven economy of Alberta.

Disaster

With the economy in as bad of shape as it is, the last thing Fort McMurray needed was a massive natural disaster to threaten the entire community. But that’s exactly what they are getting. As of today, the entire population of Fort McMurray and the surrounding area has been evacuated due to a forest fire that has threatened to destroy one of the world’s most notorious oil towns. Forest fires are actually quite common in Canada, particularly up north, but unusually hot weather and dry conditions have made this year’s fire season much more difficult to control.

As a result, there wasn’t much that firefighters could really do to stop a forest fire from threatening the community. Entire neighbourhoods are being destroyed by the fire, leaving thousands of residents homeless. Firefighters from all over the world have been coming here to help fight the inferno, but forest fires are notoriously difficult to fight. People from all walks of life have been affected, including an Opposition Leader in Alberta’s legislature who lost his home in the blaze. People who were once considered to be the highest-paid Canadians are now dependent on donations and the Red Cross for support. It is hard to believe, given the devastation, but no lives were lost due to the fire itself, although a car accident during the evacuation killed two people.

This is the view outside a Fort McMurray fast food restaurant.

This is the view outside a Fort McMurray fast food restaurant.

A map of Fort McMurray showing areas that have been damaged by the fire.

A map of Fort McMurray showing areas that have been damaged by the fire.

A Global Perspective

By any measure, the Fort McMurray fire is a disaster. To the people of the city, it’s annihilating. By a human standard, it’s an unspeakable tragedy. But the effects could be felt by ordinary people around the world, too. Because the oil plants have all shut down operations, a significant reduction in the world supply of oil has shot the price to over 45 USD per barrel (as of May 5, 2016). It’s tough to tell how long this will last, but the priority of the oil producers (including Royal Dutch Shell) is the welfare of its workers. Currently, the fire hasn’t threatened oil production, but this could also be a big issue. The short-run effects of the shutdowns are clear, but it’s unsure whether or not they will continue to have an effect in the long run. But you can expect to be paying a little bit more at the pumps as a result of the fires, regardless of where you are in the world.

However, the economic impact of the fire is meaningless compared to the social impact. While you or I might be bothered by paying a few extra dollars for fuel, there are thousands of Fort McMurray residents who now have nothing to call their own. Some people who drove Bentleys and Porsches now only have the shoes on their feet. Life will never be the same up there, and an entire nation has been touched by the devastation. Whether or not the devastation will continue remains to be seen, but I can’t help but feel for the people who still have no idea if they’re going to lose their homes or not. As a small child, I was in that very same situation, our family having been evacuated from our homes due to a forest fire. It’s a state of extreme anxiety, and it affects all people regardless of class. For now, though, all we can do is pray that the worst fears of all involved do not become realities.

Dedicated to the citizens of Fort McMurray, Alberta, Canada.