Boom2Bust.com

A Different Kind Of Storm, Part 1

In Boom2Bust.com, we’ve examined different threats to the U.S. economy. However, we must not forget natural and man-made dangers as well. One threat that I am deeply concerned about is that of hurricanes. The major forecasting centers are calling for above-average storm activity this year. However, complacency is evident in a recent survey by TripAdvisor.com, the “world’s largest travel community.” In a PR Newsire release on June 12, TripAdvisor reported that 92% of the travelers polled have not been influenced by predictions for an active 2007 hurricane season, compared to 89% in 2006. Granted, to date this year’s hurricane activity has been uneventful.

Yet, the National Oceanic and Atmospheric Administration places the odds for better-than-normal hurricane activity at 75%. NOAA is predicting 13 to 17 named storms. 7 to 10 of these storms will become hurricanes, and 3 to 5 will become major hurricanes. Colorado State University predicts that 17 storms will form, producing 9 hurricanes, 5 of which will be major events. The CSU team thinks one of those major hurricanes will probably make landfall somewhere on the Gulf of Mexico or Atlantic coasts. Another forecast team at North Carolina State University predicts 12 to 14 storms, 8 to 9 hurricanes, and 4 to 5 major hurricanes. The NCSU team foresees 1 to 2 hurricanes making landfall. Finally, AccuWeather.com expects 13 to 14 named storms, with 6 or 7 of these striking the U.S. coast. Joe Bastardi, the chief hurricane forecaster, says the Texas Gulf coast is twice as likely to be hit as in an average year and Florida appears four times as likely. Bastardi fears climatic conditions could lead to storms that intensify relatively late in their life when they are closer to landfall.

We all witnessed the devastation to the Gulf Coast region from hurricanes in 2005. Hurricane Katrina alone caused $81 billion in damage. New Orleans and other affected communities are slowly rebuilding. The U.S. Army Corps of Engineers just released a report which showed that large areas of New Orleans are still likely to be flooded in a major storm, according to the Kansas City Star on June 20. The petroleum industry has spent nearly 2 years trying to repair the damage from Hurricanes Katrina and Rita, rebuilding platforms, pipelines, and refineries in a region that produces roughly 25% of the nation’s oil and 15% percent of its natural gas. Those storms destroyed 113 of the Gulf’s 4,000 oil and gas platforms and damaged 52 others. According to the Atlanta Journal-Constitution on May 29, the Minerals Management Service, a division of the U.S. Interior Department that manages offshore leases, says the “vast majority” of production from 2 years ago has resumed, but it didn’t have precise figures. Analysts say gas prices are certain to shoot higher ($4 a gallon, perhaps) if and when the season’s first storm enters the Gulf of Mexico.

And what is the likelihood of hurricanes targeting this region in 2007? According to the Colorado State forecast team, there is a 74% chance at least one major hurricane would hit the U.S. coastline in 2007, with a 50% chance that it would happen on the U.S. Atlantic Coast and a 49% chance on the Gulf of Mexico Coast. Joe Bastardi in the Hurricane Season Forecast 2007 on AccuWeather.com predicts, “The highest area of risk has swung southwest from the Atlantic to Florida and the eastern and central Gulf Coast regions. In past years that exhibited the same climatological patterns we expect this season, these areas were the main target of Atlantic hurricanes and tropical storms.” Not what anyone wants to hear.

Believe it or not, it could be worse. Tomorrow’s post will focus on an area along the eastern seaboard that could result in the evacuation of 3 million people (more than six times the population of pre-Katrina New Orleans) and over $100 billion in economic losses from a Category 3+ hurricane.