Shakin’ and Bakin’ in the Pacific Northwest

The Pacific Northwest continues to bake under a remarkable heatwave that is shattering daily record temperatures and threatening all-time record highs. Portland, Oregon reached 106 degrees yesterday, shattering the previous record of 101. The city has a chance to break the all-time record of 107 (the hottest its ever gotten in Portland) today or tomorrow. Other major cities topping 100 in the area include Seattle, Wa (100), Salem, Or (107), and Eugene, Or (106). Several more of these records are shown in Table 1 below.

Table 1: Record Temperatures Yesterday in the Pacific Northwest

Location	New Record	Old Record	All-Time	Forecast Today
Vancouver	106*	100 (1998)	105	106
Portland Airport	106	101 (1998)	107	106
Portland Downtown	105	100 (1998)	106	105
Troutdale	105	101 (1998)	108	105
Salem	107	99  (2003)	108	106
Eugene	106	100 (1998)	108	104
Hillsboro	105	96  (1985)	108	103
McMinnville	106	104 (1998)	110	106
Astoria	92	82  (2003)	101	85

Not only are the daily high temperatures bringing dangerous heat, but nighttime lows are falling only into the mid-70s, offering very little relief from the heat. Those living in the Southeast or Desert Southwest may scoff at such temperatures, but this is a region that is very ill-prepared to handle such heat. The average high and low in Portland, Or for today are 81 and 56, respectively. As a result, many areas do not have adequate air-conditioning and ventilation.

While the heat-wave will gradually diminish starting Friday, temperatures will remain above average for the foreseeable future.

Why the Heat?

The Pacific Northwest is one of the most interesting places in the nation to study meteorology. The combination of the Pacific Ocean, the Cascades, the Columbia Gorge, and the dry Interior create a unique geography that strongly influences the weather, both in the summer and the winter.

When the wind is blowing onshore, the temperature is cool during the summer and mild during the winter due to the moderating influence of the Pacific Ocean. This is usually due to the counter-clockwise flow around an area of low pressure centered west of the area. During the summer, the flow is usually weakly onshore which keeps temperatures comparatively cool. 

However, should the wind reverse and flow offshore from the east, the area sees extreme temperatures, hot during the summer and cold during the winter. This is due to the flow off the high deserts of the Interior. Such a situation is usually caused by the clockwise flow around an area of low pressure east of the region.

However, it is more complicated than it sounds. The tall Cascade Mountains act as a buffer, shielding the Pacifc Northwest coastal Plain from rapid temperature swings. Were they absent, temperatures could swing wildly daily due to wind direction changes. However, the Columbia River, which cuts through the Cascades creating deep gorge, can act as a floodgate allowing this air to flow west of the Cascades faster than it would if it went over the mountains. For this reason, Portland, which is located very close to the Columbia River Gorge often sees some of the widest range of temperatures in the entire coastal plain. Because of this narrow channel, it takes time to erode the hot/cold air since an onshore flow cannot immediately displace the continental air if it has nowhere to go. The entire situation is shown below in Figure 1. Apologies for the Paintshop doodles. I won’t be able to re-download Photoshop until I arrive at school at Georgetown next week. 

Figure 1: The Two Pacific Northwest Weather Patterns. An Onshore flow brings mild air in of the Pacific. An offshore flow  brings continental air through the Columbia River Gorge onto the coastal plain.

This is precisely what is happening this week. Not only is the onshore flow very weak, but a strong area of high pressure is centered over the upper Mountain West. The clockwise flow around the high generates an offshore flow bringing very hot air in off the deserts. This situation is shown below in Figure 2, courtesy of Accuweather, which does have Photoshop.

Figure 2: The clockwise flow around strong high pressure over Montana brings warm air westward

If any readers live in the area, I would be interested  in hearing your perspective.

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Investing Opportunities

While this is a very localized event, there are still some good investment opportunities. This region has been above average for most of the summer so this is merely the climax of warm weather. The heat should result in a good drawdown of natural gas in the West Region, as the Pacific Northwest is one of the most populous areas of that region. I do not advise going long NG right now because, as I mentioned over the weekend, cool weather last week should result in an above average injection in tomorrow’s supply report.

However, due to the cooling demand, Power Companies operating in the region should do well. The largest publicly traded company in the region is Portland General Electric (POR) that delivers power to half the inhabitants of Oregon, including Portland, as well as southern Washingon. It operates 13 powerplants generating 2398 MWe servicing approximately 900,000 customers. It uses hydroelectric, coal, and natural gas to generate electricity. I have no position in the company. Its chart is shown below.

 

PacifiCorp supplies power to the rest of the Pacific Northwest, including Northern California. PacificCorp is a subsidiary of MidAmerican Energy Holdings, which is in turn a subsidiary of Berkshire Hathway (BRKA/B). It provides power to approximately 1.4 Million customers. It is very invested in Nuclear Energy, Hydroelectric power, and other forms of renewable energy. The rather pricey chart of mother company Berkshire Hathaway is shown below.

 

Lastly, Home Depot (HD) has reported that they have repeatedly run out of portable air conditioning units across the entire Pacific Northwest region despite frequent re-stockings and have begun to see shortages of ordinary fans. Home Depot is also a good hurricane play so I may look to add a small position at some point. Its chart is shown below.

 

Note: Major Karma Points to the first person to correctly identify the hurricane shown at the top.  This is going to be a common theme of posts for the foreseeable future. A small hurricane warning flag will be awarded to the individual with the most points at the conclusion of the hurricane season, provided that they have at least 12.

Different sort of storm today, but it relates to the post.

All knotted at 6…

1. Wabisabi-6

2. DPeezy-6

3. Yogi and Boo Boo-2

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