Predictions of an above-average 2022 Atlantic hurricane season have prompted some business owners and operators in the Southeast to count the years since Hurricanes Ivan and Katrina devastated regions along the Gulf of Mexico and beyond.
"Every 25 years, there's going to be a hurricane coming through our area," said Gray Skipper, vice president of Scotch Plywood in the southwest Alabama town of Fulton and a member of the Atlanta Fed's Agriculture Advisory Council. "The threat's always there. The worst we experienced, with a direct hit, was Ivan [2004]. With Katrina [2005], we had two tropical storms that came through Meridian, Mississippi. Before Ivan, it was Frederic [1979]."
Scotch Plywood has about 580,000 acres of timber under management, 80 percent in the Southern yellow pine that's the standard for commercial and residential construction and the remainder in hardwood. Skipper said the company's hurricane plan begins with monitoring the 10-day weather forecast. If severe weather threatens, the company schedules a harvest or chores in the forest and relocates crews to do that work before a storm arrives. Staff at the company's facilities - in Beatrice and Fulton, Alabama, and Waynesboro, Mississippi - secure anything that can blow away. The hurricane plan also calls for Scotch Plywood to deliver finished products to customers ahead of a storm, increase log inventories at veneer plants outside a storm's projected path, and close or idle plants in the projected path. "We do not want any of the employees on the road to or from our facility in the projected pathway," Skipper said.
"The whole transportation supply chain and fuel supply chain is as tight now as I've seen it in 41 years."
Michael Mansfield, CEO, Mansfield Energy Corp.
The Federal Reserve Bank of Atlanta pays attention to hurricanes because of their potential impact on area residents, as well as on the local and national economies. On May 31, the Atlanta Fed's Miami Branch hosted Michael Brennan, deputy director of the National Oceanic and Atmospheric Administration's (NOAA) National Hurricane Center (NHC), to talk about weather systems that affected the Atlanta Fed's district. Among the storms Brennan cited was Hurricane Ida, which in 2021 directly caused 55 deaths and $75 billion in damage as it tracked across the nation from its landfall in southeastern Louisiana to its exit into the Atlantic Ocean off the coast of Massachusetts, according to a report by the National Hurricane Center. (The storm was so catastrophic that NOAA retired the name Ida.)
Damage in the wake of Hurricane Ida in 2021.
Looking ahead to this year's season
This year's forecast is the seventh consecutive prediction of an above-average storm season. From six to 10 hurricanes are predicted to develop out of the 14 to 21 tropical storms expected to be big enough to be named. According to a May 24 report from the National Weather Service's Climate Prediction Center, a tropical storm is named when wind speeds reach 39 miles an hour. When wind speeds reach 74 miles an hour, the storm is considered a hurricane.
"As we learned in Hurricane Katrina, if it is not an appropriate time for visitors to return, we say it. Credibility is key."
Mark Romig, senior vice president and chief marketing officer of New Orleans & Company
In addition to timber growers and producers such as Scotch Plywood, farms in the Southeast provide significant amounts of staple crops that are vulnerable to the high winds, driving rains, flooding, and tornados brought by hurricanes and the ensuing tropical depressions. Like timber farmers, these producers have limited responses to impending extreme weather beyond securing property and providing for staff's personal safety. The list of high-value crops includes peanuts, soybeans, sugarcane, cotton, citrus, and hay. Catfish is another staple that's vulnerable to farm-pond flooding that can have national consequences, as Alabama and Mississippi accounted for 87 percent of the nation’s total sales of catfish in 2020: $322.7 million of the nation's $370.7 million, according to the latest data cited in a 2021 report issued by the US Department of Agriculture (USDA). The nation's supply of broiler chickens is also at risk during extreme weather. The Sixth District accounts for 40 percent of the nation's output of broilers, producing 3.7 million out of a national production of 9.2 million, according to a 2021 USDA report of 2020 production. Georgia ranks first and Alabama second nationally in broiler production.
Storms raise fuel concerns
Oil and gas facilities are in the spotlight during storm events in the Gulf of Mexico, and for good reason: the region is home to a significant proportion of the nation's production and processing facilities. The Gulf's federal offshore oil production represents 15 percent of the total US crude oil production, and federal offshore natural gas production accounts for 5 percent of the nation's consumer-grade natural gas. Facilities along the Gulf provide more than 47 percent of the nation's petroleum refining capacity, plus 51 percent of the natural gas processing plant capacity, according to a fact sheet released by the US Energy Information Administration (EIA).
Michael Mansfield suggests this traditional focus on storm-induced risks to production and processing of fossil fuels along the Gulf should be shifted this year to a looming national shortage of diesel fuel. "The whole transportation supply chain and fuel supply chain is as tight now as I’ve seen it in 41 years," said Mansfield, a member of the Atlanta Fed's Energy Advisory Council and CEO of Mansfield Energy Corporation, in Gainesville, Georgia, which delivers fuels and energy services to major consumers including airlines, trucking firms, waste haulers, and the military.
This offshore oil rig capsized when Hurricane Katrina hit.
The supply-chain tightness Mansfield describes touches on factors including the declining number of refineries, fuel supply shortages at tank farms, and a lack of drivers to deliver fuel from these depots to filling stations and other destinations. The number of operating refineries has dropped by 15 since 2016, down to 124 at the latest count, according to a 2021 EIA report. Meanwhile, the East Coast supply of diesel, aviation, and home heating fuels currently is less than half of the five-year average at the start of the busy summer travel season: 21 million barrels at the start of June compared to a five-year average of 45 million.
Compared to these shore-based supply woes, Mansfield said hurricane-based disruptions of oil and gas production in the Gulf are manageable. Despite eye-popping images of an oil rig being buffeted by a foul weather, Mansfield contends rigs are now designed to be fairly resistant to storm damage, and operators have adequate warning and capacity to evacuate crews before storms hit. In addition, the web of underwater pipes that transports oil and gas from wells to the mainland are fairly stormproof because all such pipes installed in less than 200 feet of Gulf water must be buried "to reduce the movement of pipelines by high currents and storms," according to a manual of mitigation measures for oil and gas pipeline installation produced by the U.S. Department of the Interior.
The hospitality industry heeds the storms
In New Orleans's hospitality industry, lessons learned from Hurricane Katrina continue to be implemented and serve well, according to Mark Romig, senior vice president and chief marketing officer of New Orleans & Company, the official destination marketing organization for the city's tourism industry. (Romig is a member of the Atlanta Fed's Travel and Advisory Council.) Communication with member organizations as well as customers is central to New Orleans & Company's preparedness plan. Another part of the preparedness plan is monitoring weather forecasts. The organization's current hurricane plan proved solid during Hurricane Ida, and no major changes were deemed necessary.
"After each storm, we conduct a briefing to review what worked and how we can improve," Romig said. "After the extended power outages seen in Ida, New Orleans & Company is tweaking the physical location of our leadership and crisis team so that we have a mix of people on the ground in New Orleans, as well as leaders working in other cities with 24/7 power, internet, and ability to communicate."
Katrina left a wide swath of human misery and economic damage in its aftermath. Photo courtesy of FEMA.
In addition, Romig said, the organization is responding to changes in the hurricane season itself, such as the apparent lengthening of the storm season that traditionally wound down in October and officially ended November 30. Hurricane Michael, for instance, made landfall on Florida's Panhandle fairly late in the season—on October 10, 2018—and was responsible for 16 deaths and about $25 billion in property loss in the United States, according to a report by the National Hurricane Center. As Romig observed: "As storms become more frequent, possibly hitting later in the calendar year, we must ensure that our customers who are bringing events to New Orleans in the fall are comfortable with the city's preparedness. As we learned in Hurricane Katrina, if it is not an appropriate time for visitors to return, we say it. Credibility is key."
The NHC is also monitoring the quickening rate at which young storms balloon into major events, Brennan said in his presentation at the Miami Branch. Hurricane Michael is a case in point. Five days before it made landfall, the NHC gave a weather disturbance located southwest of Mexico's Yucatan coast a probability of less than 30 percent of developing into a significant storm. The disturbance grew so fast and traveled so quickly that the hurricane watch for the Gulf Coast was issued just 36 hours before Hurricane Michael made landfall, giving residents only a short time to prepare for a hurricane that would come ashore near Panama City, Florida, with winds up to 160 miles per hour, according to the NHC storm report. The debris left across 2.8 million acres of trees that Michael damaged or destroyed became fuel for the Chipola Complex Fire, which in March 2022 threatened the Panama City area as it burned across more than 34,000 acres before rainfall helped the Florida Forest Service contain the blaze. As Brennan observed: "Short-fuse hurricane events…what's your short-fuse plan? The Gulf Coast and Florida are at special risk. This is definitely a concern."
David Pendered
Staff writer for Economy Matters