Wednesday, March 3, 2010

Hurricane Watch: "An early peek at this year's hurricane season. (It looks active)" BRK-B

Last week's "Berkshire Hathaway's "Buffett Picks Insurer Cooperation Over Competition " (BRK-B; BRK-A)" concerned Mr. Buffett's investments in a couple competitors. I commented:
This is worth keeping an eye on. After a hurricane season with no U.S Atlantic or Gulf landfalls, catastrophe bonds scored big and the reinsurers pocketed a bunch of premiums. The state of Florida's decision to self-insure also worked out.

This year may not have as favorable a El Nino/Southern Oscillation, I'll post the latest NOAA advisory after the headline story....
Here's the latest on what should be a more active hurricane season, from the Houston Chronicle's SciGuy, Eric Berger:

Let's start with this: Hurricane season outlooks are, at best, very general guidelines for what to expect during an upcoming year. However, last year forecasters did, in fact, correctly predict a substantially lower number of storms for 2009 than we saw in 2008.

So what's the prediction for this year? William Gray and Phil Klotzbach already released their first prediction way back in December (11-16 named storms), which they will update next month.

And this week ImpactWeather, a private forecasting company in Houston, will release its prediction. The company will call for 14 named storms (9.6 is the long-term average) and 7 hurricanes.

This far in advance of hurricane season forecasters can begin to assess two important factors that help control the number of storms and their intensity: sea surface temperatures and wind shear. Here's ImpactWeather's rationale:

Sea Surface Temperatures: As with any hurricane season forecast, one of the primary tools we use to make our prognosis is the study of water temperature anomalies in the main development region (the tropical Atlantic between Africa and the Caribbean Sea). Compared to last year at this time, water temperature anomalies are currently averaging from 2.0 to 3.0C (3.6 to 5.4F) higher, meaning there is considerably more available heat content for tropical cyclones to develop. We expect these warmer than normal sea surface temperatures to persist through the hurricane season.

Wind shear: One of the main indicators we look at to determine the intensity of wind shear in any given tropical season is whether there will be an El Niño. The presence of an El Niño will produce higher westerly wind shear, resulting in a net reduction of named tropical cyclones. There is currently a moderate El Niño in place across the Pacific Ocean, but we expect it to quickly weaken this spring and likely dissipate by the summer. So El Niño should not be much of a factor. Over the Atlantic, we expect the Bermuda High to average a little weaker than normal, which should result in slightly less easterly low-level wind shear over the MDR. This may play a role in keeping the Tropical Atlantic a bit more active.

Here's an updated sea surface temperature map from the National Hurricane Center that shows the higher temperature in the main development region discussed above. You'll note that temperatures are especially warm where tropical waves come off the African coast and sometimes develop into tropical storms.

National Hurricane Center

You might also notice that the Gulf of Mexico is quite cool, relative to its normal levels for this time of year, as a result of the very cold winter that Texas and the southeastern United States have experienced. Unfortunately the cooler-than-normal water will likely not linger into hurricane season....MORE