If Dennis continues to strengthen as the models indicate and moves on his same general path (nearly always a risky assumption with hurricanes), and comes ashore at or just to the west of New Orleans, a catastrophe could be at hand. Read this story about what could happen if a Cat 5 'cane hit the Big Easy:

The map is covered with arrows and swirls in erasable marker. They show how the fictitious hurricane crossed Key West and then smacked into New Orleans.

When the computer models showed Maestri what would happen next, he wrote big letters on the map, all in capitals.

"KYAGB--kiss your ass good bye," reads Maestri.

"Because," says Maestri, "anyone who was here when that storm came across was gone--it was body-bag time. We think 40,000 people could lose their lives in the metropolitan area."

And some scientists say that figure is conservative. People have known for centuries that New Orleans is a risky spot -- the biggest river in North America wraps around it; and most of the land is below sea level. But researchers say they've been learning just how grave the problem is, only in the last few years. And they say the city and the nation aren't prepared to handle it.

Of course, the siren for this was sounded last year as well with Ivan, and he swung east.

But what else is out there in the Gulf? What is out there that can be disrupted whether a hurricane makes landfall or not? Hmmm, I wonder...

July 6 (Bloomberg) -- Crude oil surged to a record $61.35 a barrel in New York on speculation that Tropical Storm Dennis may disrupt shipments along the U.S. Gulf coast. Gasoline and heating oil also rose to records as refineries shut.

Dennis may strengthen to a hurricane today, becoming the earliest ever to form in the Atlantic, the U.S. National Hurricane Center said. The storm may enter the Gulf in three days. Oil output and refinery operations in the region were cut because of Tropical Storm Cindy, which made landfall overnight. The Louisiana Offshore Oil Port shut yesterday because of Cindy.

[...] The Loop, the biggest U.S. oil import terminal, stopped unloading cargoes from tankers yesterday because of the storm. The port may resume operations today, a port official said.

States along the Gulf coast receive more than half of U.S. oil imports and are home to 50 percent of the nation's refining capacity. The region also is the source of 30 percent of U.S. oil production, according to the Minerals Management Service.

``Dennis looks like it will be much stronger and could lock down platforms in the Gulf,' said Aaron Kildow, a broker at Prudential Financial Derivatives LLC in New York. ``It's only the first week of July and we've had four named storms, which is an awful lot.'

Kevin Drum at The Washington Monthly discusses this:

In the short term, oil prices can do anything. They may well go down later this year depending on winter weather forecasts and the state of worldwide inventory levels.

Still, this is disturbing news. Oil is already at $60 a barrel, but even so the price is spiking upward because of a trivial supply disruption in the Gulf of Mexico -- an area where summer hurricanes are hardly a surprise.  Spare capacity is now so close to zero that the mere threat of a small and fully predictable disruption is enough to send prices heavenward.

So: what would happen if the market suffered a slightly larger disruption? Nothing enormous, just one of the normal kinds of things that happen periodically but weren't a big deal back when other suppliers could increase production to fill the gap. Like, say, another strike in Venezuela similar to the one that cut off 2 million barrels of oil per day for several months in 2003? Something like this is bound to happen in the next year or so, and if a shortfall of 200,000 barrels can spook markets, a shortfall of a million barrels will scare them out of their skins. $100/barrel oil could look cheap before long.

Oil futures traders are thinking the same thing:

July 4 (Bloomberg) -- Record oil prices may increase to $80 a barrel this year, options contracts on the New York Mercantile Exchange show. Investors are speculating OPEC won't produce enough oil to compensate for any disruption to supplies.

New York Mercantile Exchange data show 6,900 options contracts outstanding that allow buyers to purchase oil for December delivery at $80 a barrel, compared with an average of 77 contracts in January. The probability that oil will top $75 a barrel when the December crude contract expires is 21 percent, according to Adam Sieminski and Michael Lewis, strategists at Deutsche Bank AG, up from 5 percent at the start of the year.

Those of you who took my hint of a few weeks back (hi Ed!) to watch Oil Storm will now be recognizing the above scenario, because it's precisely how the movie started, with a tropical system in the Gulf causing enough damage to shut down the Louisiana Offshore Oil Port for 18 months.

And, if you're Matthew Simmons (bigshot oil industry analyst, and sometime energy adviser to Messrs. Bush and Cheney), you're thinking this:

Oil prices could rocket to $100 within six months, plunging the world into an unprecedented fuel crisis, controversial Texan oil analyst Matt Simmons has warned.

After crude surged through $60 a barrel last week, nervous investors were pinning their hopes on a build-up in US oil-stocks to depress prices in the coming months.

But Simmons believes surging demand will keep prices bubbling well above $50. 'We could be at $100 by this winter. We have the biggest risk we have ever had of demand exceeding supply. We are now just about to face up to the biggest crisis we have ever had,' he said.

Aren't you glad I came up from the bunker long enough to share this with you?