Everyone’s looking for Chantal… But she’s nowhere to be found..!
It may sound like a name given to hundreds of children on council estates around the country, but it is actually the designated name for the next hurricane in the Atlantic storm season… But where is she…? Buying a new hoodie at TK Maxx? Sharpening her knives?
The fact that there have been no hurricanes so far in the Atlantic tropical storm season, which officially runs from 1 June to 30 November, is not really a sign for celebration; despite the fact it appears to be scuppering most weather forecasters’ predictions.
As I have mentioned before, US hurricane experts have been predicting a dire 2007 storm season for months. There were even comparisons with the situation in 2005 when Katrina caused a massive amount of damage to the oil-producing areas of the Gulf of Mexico. This caused a sharp intake of breath amongst oil traders and left storm-protection shutter manufacturers rubbing their hands with glee.
However, it’s all been a bit of a damp squib.
We’ve only seen subtropical storm Amanda and tropical storm Barry so far – and they were both pretty mild and uneventful. They never made it to hurricane status and both threats turned out to be a non-event.
So, as Britain disappears under a devastating torrent of water, has the US got off lightly? After all, the forecasts for a dire season in 2006 all turned out to be dead wrong too. Weather prediction is notoriously unreliable, so has the upside risk to the oil price decreased?
Initially, the thing that set all the alarm bells ringing was the fact that subtropical storm Amanda formed almost a month before the official start of the hurricane season. This was at exactly the same point at the start of May as tropical storm Adrian formed in 2005 – the year New Orleans was all-but destroyed.
But all this hand-wringing has been a waste of time. Hardly anything has happened so far.
A quiet June, however, is no reason to celebrate. Historically, the busiest months of the season are usually August and September, when the Atlantic conditions are at their best for hurricane formation.
Forecasters have predicted that 17 named storms will form in the Atlantic this year, with nine of those becoming hurricanes. Five of those hurricanes are expected to be major hurricanes (Categories 3, 4 and 5 on the Saffir-Simpson scale).
The most active season since accurate recordkeeping began in 1944 was 2005 – so let’s take another look at the damage it caused.
During the 2005 season there were 27 named storms including 15 hurricanes, seven of which were classified as Category 3 or higher. The paths of five of these major hurricanes passed through the Gulf of Mexico significantly disrupting oil and natural gas production.
The US Department of Energy calculated that oil production for the whole year was reduced by 30% and gas production by 21% because of the storm damage.
In addition to the upstream impacts to Gulf production, hurricanes also have a significant impact on midstream and downstream infrastructure. A total of 457 underwater pipelines were damaged in 2005, and the Louisiana Offshore Oil Port had to temporarily stop accepting shipments during both Rita and Katrina.
Even onshore refineries and natural gas processing facilities suffered heavy damage. Immediately after Katrina hit Louisiana, almost 2 million barrels per day of refinery capacity was shut down. This was due to either direct damage or interruption of power supplies.
The US Energy Information Administration estimated that at the height of the refinery outages (September 22-25, 2005), as much as 4.9 million barrels per day of refining capacity (almost 29% of US refining capacity and more than 60% of refining capacity in the Gulf Coast region) was shut down.
This damage was serious. As late as 10 October 2005 more than 2 million barrels per day of refining capacity was still out. A similar event this year would be disastrous. US refining capacity is struggling to keep pace with demand and US gasoline prices at the pump have already seen a sharp move upwards. Just one hurricane hit would be a disaster – and send the oil price racing ahead.
I don’t know about you, but if I hear of a major hurricane that is heading towards the Gulf of Mexico, I’ll be on my phone to my broker immediately filling my boots with a basket of oil stocks. You know it makes sense…
By Garry White for his ‘Garry Writes’ newsletter.