Gov. Chris Christie, who was on his way back to the state from a political trip to North Carolina, urged residents to prepare for a "serious storm."
Mary Goepfert, a spokeswoman for the state Office of Emergency Management, said the storm could be worse than Tropical Storm Irene last year.
"This is a very serious situation where it appears at this point that the western part of the state will be affected, too," she said. "If it stays on track, we'll be on northern end of the storm, which is the worst place to be. The whole state will be impacted in some way."
The Property Casualty Insurers Association of America said last year that Irene caused $915 million in insured damages in New Jersey. If Sandy is a worse storm, that figure could easily soar past $1 billion.
The state DEP banned harvesting shellfish from 720,000 acres of coastal and inland waterways until after the storm, fearing the massive rainfall would wash harmful bacteria into the water that could affect clams, oysters and mussels.
Residents were taking scary warnings about Sandy seriously.
Boat owners pulled their vessels out of the water. Workers removed the canopy from a boardwalk merry-go-round in Point Pleasant Beach. And boardwalk arcades were sandbagged.
Atlantic City's casinos made contingency plans for possibly having to close, like they did for three days last year when Tropical Storm Irene approached.
And utilities, still smarting over widespread criticism of their performance after Irene and a freak October snowstorm last year that left thousands without power for days on end, were calling in extra workers and lining up replacement crews from other states.
If Sandy makes landfall over the state as a hurricane it would be only the third one to do so in the last 200 years and the first since 1903.
Wayne Parry can be reached at http://twitter.com/WayneParryAC
Associated Press writers Katie Zezima in Pompton Lakes, David Porter in Newark and Angela Delli Santi in Trenton contributed to this story.
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