According to Peteducation.com, a dog's fear of loud noises can be attributed to a negative experience in their past and if not dealt with the anxiety will only grow over time if not dealt with.

There are several methods to deal with the problem. You can ask your vet for medication (ie Clomicalm or Valium) which decreases anxiety. You also place the dog in a room that you know will be quieter to lesson the noise, make sure the dog has enough exercise and proper diet, or try desensitizing the dog to loud sounds (although it may be difficult to summon a thunderstorm at will).

The key is not to reward or give positive reinforcement (ie petting and attention) when they start to exhibit unwanted behavior. It doesn't calm them down. It only reinforces their behavior.

Personally, my dog was afraid of loud noises (ie sirens, fireworks the mailman walking out my door). Once I got him a crate to hide in. He felt safe, secure and his (and mine) anxiety level have gone down.
Source(s):
http://www.peteducation.com/article.cfm?c=1+2174&aid=2545
http://blog.orlandodogparks.com/2008/07/dealing-with-dogs-anxiety-from.html

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