‘Extremely Dangerous’ Hurricane Michael Heads for Florida’s Panhandle

(Bloomberg) -- Hurricane Michael is racing toward the Florida panhandle, threatening as much as $10 billion in damage on a path that’s already driven up cotton prices and cut the region’s oil and gas production.

Located about 360 miles (579 kilometers) south of Panama City, Florida, Michael is forecast to become the second hurricane to make landfall in the U.S. in a month. Its 110 mile-per-hour winds are just below the threshold for becoming a Category 3 hurricane as it plows through the Gulf of Mexico at around 12 miles per hour, according to the National Hurricane Center.

Landfall is expected Wednesday, when forecasters say it could generate a 12-foot (3.7-meter) “life threatening" surge, and 4-8 inches of rain, with isolated areas getting as much as 12 inches. After ripping through Florida, the storm’s set to hit Georgia and Alabama.

“Additional strengthening is expected, and Michael is forecast to be a major hurricane at landfall,” said Dan Brown, a senior hurricane specialist at the National Hurricane Center, in a forecast analysis.

Michael is arriving after Florence hit North Carolina on Sept. 14, causing devastating floods, killing at least 39 and causing about $45 billion in estimated damages.

Duke Energy Corp. which saw about 1.5 million customers in the Carolinas lose power from Florence, is warning its 1.8 million Florida customers to prepare for extended power outages. The company is moving utility crews and resources into the area to help restore power as soon as it’s safe to do so.

Damage Estimate

The latest storm is likely to cause $7 billion to $10 billion in damage, with Panama City, Florida, taking the hardest hit, said Chuck Watson, of Enki Research in Savannah, Georgia. Downed trees, power outages and flooding across the region will all contribute to the costs.

“Michael is definitely shaping up to be a classic hurricane,” Watson said by telephone. “So the estimates are a bit more stable since you don’t have the stall and wander problem” that made Hurricane Florence hard to calculate.

‘Extremely Dangerous’ Hurricane Michael Heads for Florida’s Panhandle

Any cotton that hasn’t been harvested in Georgia and across the southeast could be damaged by the storm, said Don Keeney, senior agricultural meteorologist at Radiant Solutions in Gaithersburg, Maryland.

Rain will hurt the quality of the crop, and wind could knock the plants about, making them worthless, Keeney said. Most corn and soybeans in the region have probably already been harvested, though crops that remain in the field could be affected.

On Sunday, Florida Governor Rick Scott declared a state of emergency for the counties in and around the panhandle, and at least three counties announced mandatory evacuation orders Monday. Alabama also declared a state of emergency Monday afternoon. Other parts of the state will also be affected, with a surge of 2 to 4 feet forecast for Tampa through Thursday.

While the panhandle is more sparsely populated than many other areas of Florida, it includes the capital city of Tallahassee, Pensacola and Panama City.

Most citrus plantations in Florida are in the lower two-thirds of the peninsula, away from the storm’s path. Still, heavy rain could create difficulties for the U.S. Southeast cotton harvest. Georgia had collected only 6 percent of its crop as of Sept. 30 and Alabama had reaped 5 percent, U.S. Department of Agriculture data show.

After making landfall in the Panhandle region, the storm is forecast to bend back across Georgia, North Carolina and South Carolina later in the week, ending up back in the Atlantic.

Here’s the latest on the storm’s effects:
  • Hurricane warnings are in effect from Suwannee River, Florida, to the Florida-Alabama border, and a hurricane watch is in effect for the entire coast of Alabama
  • The Coast Guard Tuesday closed ports at Gulfport and Pascagoula in Mississippi, Mobile in Alabama, and Panama City and Pensacola in Florida, and restricted vessel traffic on the Intracoastal Waterway.
  • Operators evacuated 10 drilling platforms, moved 5 rigs out of the storm’s path and shut in 19 percent of oil and 11 percent of natural gas output in the Gulf of Mexico, according to the Interior Department.
  • Cotton futures in New York were little changed on Tuesday after earlier reaching a one-week high. On Monday, the price rose 1.9%, the most in four weeks.
  • Total insured losses for Hurricane Michael should be manageable and have minimal impact on property reinsurance pricing, KBW analyst Meyer Shields wrote in a note.

The Atlantic has produced 14 named storms this year. They include Hurricane Florence, the most powerful one so far this year, and Tropical Storm Gordon, which made landfall on the Alabama-Mississippi border last month.

‘Extremely Dangerous’ Hurricane Michael Heads for Florida’s Panhandle

The panhandle region has suffered significant storm damage in the past, hit by Hurricane Ivan in 2004 and Hurricane Dennis in 2005. In 2010, the Deepwater Horizon oil spill hit Pensacola Beach, hurting the fishing and tourism industries.

The area is also home to a number of military bases, including the Naval Air Station at Pensacola and Eglin Air Force Base.

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