With Tropical Storm Dorian making moves across the Atlantic, you may have noticed an increase in your grocery bill. The price of oranges has popped up quite a bit, as traders are worried about the potential threat of Dorian reeking havoc on Florida, damaging the crop.
A few months ago I did some research on managing weather risk. Since the deregulation of the energy industry in the United States in 1997, companies have began to use risk management to protect their assets from weather uncertainties. I thought it would be appropriate to share a little snippet of what I came up with, as we await Dorian’s arrival:
There are two types of weather contracts: standardized exchange and over-the-counter based contracts. Standardized exchange based contracts are placed by a broker, and bought and sold by traders, through the Chicago Mercantile Exchange. The buyer’s account with the broker is credited or debited based on the variable price of the weather risk. The most popular weather derivative is temperature.
Over-the-counter (OTC) contracts are more of a gamble, but they are tailored to meet the customers’ needs and are growing at a quicker rate than standardized exchange traded contracts. OTC contracts are placed directly with investment sources such as hedge funds or reinsurers and are either held on dwell time or traded against other non-standardized products. 
Weather derivatives differ from insurance because they cover everyday weather occurrences, while insurance protects customers from rare weather disasters. Weather exposure is sensitive to the revenues of the weather index. The energy sector in particular has high stake in the weather derivative market. It was reported in 2002 by the utilities company Dominion that they had lost 14 cents per share in the first quarter of that year, due to a mild winter. This equated to a loss of $47 million in the first quarter alone.
This summer I’ve been spending my afternoons working on the 4FSU Weather show. Just wanted to share one of our 15 minute shows that we put out live during the week down here in the Tallahassee area. Hope all of you up north are taking care of yourselves during the heat wave! You’re all getting a little taste of what it feels like down here in the Gulf! PS I’m in the last 3 minutes of the show 😉
I’m starting up a little YouTube channel to make a collection of all the most extreme weather events caught on tape! If you have any favorites, please share! 🙂
WeatherWonderings YouTube Channel
This past week has been quite the wet one for those of us along the east coast, and especially down in the panhandle of Florida. Inlet beach, Florida had received nearly 20″ of rain in two days! That is crazy stuff right there! But you may be wondering what is causing all this rain, that put quite the damper on your 4th of July activities?
Check out those rainfall totals!
There is an upper level trough sitting over the Mississippi River Valley, pulling tropical moisture northward, causing all the rain we have been seeing. Ahead of a trough is where we see precipitation and a dip in the temperature. Sitting in the Atlantic is a ridge of high pressure. High pressure systems are relatively stable bringing along those beautiful sunshine filled perfect days everyone hopes for when they plan a trip to the beach. The ridge of high pressure over the Atlantic has stalled, keeping the trough put, adding to those already record rainfall amounts to the east of the system.
The brown dotted lines in the above photo indicate troughs. If you’re curious about what the other symbols mean, check out noaa.gov.
Happy First Official Day of Summer! Bring on the popsicles, beach trips and weekend adventures! Although summer is a favorite time for most, as memories of running through the sprinkler and hearing the happy tune of the ice cream truck come to mind, for those along the East coast, summer also brings those sticky, sweaty conditions. The most popular kid at the party seems to be relative humidity, but in reality dew point is the real key as to why it feels the way it does outside.
Relative humidity is determined by dividing the dew point temperature, or the temperature at which the air becomes saturated, by the actual air temperature…you may be thinking, well what’s wrong with that? Well let’s take Florida for example. Each morning in the summer, dew forms on the grass, as the temperature outside matches the dew point, roughly 72 degrees. Humidity=100%. However, as the summer sun heats up the atmosphere, the temperature rises to the low to mid nineties, but the dew point remains the same. Humidity=56%. Comfortable and dry? Uhh for any Floridians out there you know that this is absolutely not the case.
Dew Point on the other hand is the BEST indicator of degree of comfort. A dew point in the 50’s as those lucky ducks on the west coast feel most of time is very comfortable. Whereas a dew point in the 70’s, typical of summer conditions for the rest of the nation is when you begin to feel very uncomfortable and sticky.
Here’s an infograph of dew point temperatures to hopefully make things a little bit clearer:
Tropical Storm Andrea made landfall yesterday around 5:30pm in the Big Bend region of Florida. Unlike the tropical storms Floridians are used to, Andrea had trouble developing due to dry air to the west of the system. Low pressure systems rotate in a counter clockwise motion. Therefore, the rainfall was not as intense as it could have been.
Don’t get me wrong, Andrea still walloped those in Florida, and along the coast. It spawned a total of 7 tornadoes across the peninsula, and dropped up to 5 inches of rain in some places. The most dangerous part of Tropical are not the winds, but rather the flash flooding and storm surge. It is always better to be safe than sorry, as even 6 inches of water can sweep you off your feet.
Andrea is still moving steadily up the coast. As of this afternoon, it is now a Post Tropical Storm, as wind speeds have dropped below 45mph. It should continue to make its way up the coast to Canada by tomorrow afternoon.
Photos from https://www.facebook.com/US.National.Weather.Service.gov?fref=ts
I planned to write my first blog post as a summary of the tornadoes that devastated the midwest this past May. However, with the developing storms that are currently hitting the Oklahoma City area tonight, I think the best post is featuring a youtube video of an elderly woman who was reunited with her dog. Thoughts and prayers to those in harms way.
WeatherWonderings 