Hurricane season is not just underway; it is in full swing. This poses a new danger to the economy due to the threat to rigs and refineries in the Gulf of Mexico, as well as to businesses and homes in the Southeast, particularly Florida.
The storm named Irene was upgraded to a hurricane today as it hit Puerto Rico with 70 mile per hour winds. It is likely to reach Miami with its full force by Friday morning.
No one predicts that this season of storms will produce another Hurricane Andrew, which destroyed large portions of Florida in 1992. That was the third Category 5 hurricane to make landfall in the U.S. in the past century. Meteorologists also do not expect an event like the one that accompanied Katrina.
New storms do not need to cause the damage that some of the biggest storms in the past did to further slow the U.S. economy. A shuttering of oil rigs in the Gulf and refineries along its northwest shore would be enough to interrupt hundreds of millions of dollars of production. Damage to businesses and individual property in Florida or the Eastern Seaboard could reach the hundreds of millions of dollars as well, which would cause business interruptions and lead to large insurance company payouts.
The NOAA has forecast that 2011 will be one of the most active hurricane seasons on record. The service predicts that the season the will produce 14 to 19 named storms, seven to ten of which will become hurricanes. It reported that three to five of these storms could reach the Category 3 level, with sustained winds of more than 110 miles per hour.
Hurricanes may not produce huge losses this year, but if they do, an already troubled U.S. economy could become more so.
Douglas A. McIntyre
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