ANOTHER BAD HURRICANE SEASON
Forecast Parameter and 1950-2000 Climatology (in parentheses) New Statistical Scheme
Analog
Scheme Adjusted
Final
Forecast
Named Storms (9.6) 11.0 13.3 17
Named Storm Days (49.1) 57.4 76.1 85
Hurricanes (5.9) 6.7 8.8 9
Hurricane Days (24.5) 28.8 40.9 45
Intense Hurricanes (2.3) 3.0 5.5 5
Intense Hurricane Days (5.0) 7.7 15.3 13
Net Tropical Cyclone Activity (100%) 124.0 192.0 195
Courtesy of Colorado State University's Department of Atmospheric Science. The above table demonstrates the Hurricane 2006 season will provide about double the storm activity of comparative years since 1950.
Unusually bad weather drives up energy prices. This summer's hurricane season may be the equivalent to this past winter's European gas shortages, courtesy of the Ukraine/Russia squabbling and a bad winter.
Over the past two decades, hurricane watchers have learned to pay attention to Dr. William Gray of Colorado State University's Department of Atmospheric Science. While based in hurricane-absent Fort Collins, Colorado, his atmospheric studies have proven Nostradamus-like prescient over the past 22 years. Why are we talking about hurricanes? Hurricane announcements tend to drive up energy futures. The number of hurricane days adds pressure to an already tight energy market. Hurricanes start to show up on an investor's radar during August.
Because of anticipated tight uranium supplies for June utility buying and the anticipation of Russian fireworks in mid July, a fitting climax for a strong surge in uranium pricing might come along with a major hurricane hitting the Gulf Coast. Last year's Katrina can serve as a reminder that climate changes can impact energy prices, uranium included. We believe in the high probability of an encore to last year's energy shortages.
While this year's hurricane season is not expected to match the number of devastation of 2005, it still rates at 195 percent for a Net Tropical Cyclone Activity rating. Last year's first tropical storm, Arlene, formed on June 9th. This year's Tropical Storm Alberto formed a year and a day later. Exclude the busiest hurricane season in 154 years of storm-tracking, and this year's is well above the average hurricane season. The National Oceanic and Atmospheric Administration (NOAA) estimated up to a total of 16 storms, as many as ten hurricanes and up to six Category 3 or higher hurricanes. Dr. Gray's team estimates similar numbers, but places the brunt of the storms' impact on the eastern United States.
Storms mainly cause panic. It is the landfall which causes devastation. Using Steering Current Predictors, sea surface temperatures, a 52-year statistical hindcast, North Atlantic and Arctic Oscillations and other parameters, Dr. Gray forecast in his recent report, "The odds of a major hurricane making landfall along the East Coast are more than twice the climatological average value this year." He forecast a 38-percent probability of a major hurricane hitting land along the Gulf Coast this year.
The most chilling comparisons made in the "Extended Range Forecast of Hurricane Activity for 2006" were those which went unremarked by the media. Dr. Gray compared Hurricane Season 2006 to hurricane seasons in 1961 and 2004. Hurricane Carla in 1961 was ranked 3rd by barometric pressure at landfall of all hurricanes entering the Gulf Coast. The 2004 hurricane season brought Charley, Frances, Ivan and Jeanne, which were some of the most devastating U.S. hurricanes recorded.
We expect this will be a strong factor in an August-September runup in uranium prices. Subsequently, this will positively impact uranium stocks through the slower summer months.
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James Finch contributes to StockInterview and other publications. Sign up for free updates to stay informed of latest developments in the energy markets by visiting http://www.stockinterview.com. You can also write to James Finch at jfinch@stockinterview.com
