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Ammo Prices & Availability: An Economic Analysis & Suggestions

Ammo Prices & Availability: An Economic Analysis & Suggestions

Ammo Prices & Availability: An Economic Analysis & Suggestions

Several (including myself) are frustrated now with the low availability and high prices of ammo and not being able to practice and enjoy their firearms. Some are paying outrageous prices for ammo and accessories now, some companies are price gouging, and some people are waiting out this absurd and paradoxical dilemma. Some are panicking and rushing out regularly to buy just one box of ammo frequently, no matter the price. So how does a few million gun owners buying a box of ammunition regularly affect the quantity and availability of ammo for many. For that matter, how does the government buying over a billion rounds affect availability. All of the ammunition companies seem to be at full capacity, running several shifts of production several days a week. Ammo manufacturers don’t want to expand production because they fear the same gun control and ownership limitations legislation that gun owners worry about. The ammunition companies as for-profit entities must consider their business risk and are not willing to invest the capital in new equipment, given the uncertainty about how future legislation will affect the ability to purchase ammunition and the restrictions. Florida even has a ridiculous House and Senate Bill pending now that would require an anger management class for those that purchase ammo. So, the frustrations, limitations, uncertainties, and shortages continue. Some believe that even if the demand stopped right now (highly unlikely), it would take ammo manufacturers at least a year to catch up on current backorders. Several of my bulk ammo suppliers have told me that my wait now would be 6-8 months, even given my frequent bulk purchases for my firearms classes. So sadly I must give you my opinion which is we probably will not see the usual “normal” ammunition supplies for the typical shooter for at least a year and maybe longer. Who really knows the answer, given the fluid fluctuations in the complex factors that influence this, but still I hate it. I want to understand it, so have drawn from my micro and macro economic experiences and studies and offer my over-simplified Supply and Demand analysis.

Ammo PricesAmmo price is a result of the complex interaction of the several forces of supply and demand. So it would seem simply that if demand increases, prices rise and if supply increases, prices fall. BUT recognize that Prices are never steady, regardless of the type of ammo product. So, Higher prices decrease the demand and increase the supply, while Lower prices increase the quantity and decrease the supply. We know this from microeconomics. So, we reluctantly accept that the ammo market will move up and down adjusting the quantity of supply and the quantity of demand until they reach an equilibrium Price.

When using the term “Demand” most shooters think the word means a certain volume of spending, as when we say that the demand for guns has fallen off or the demand for ammo is high. But that is not what economists mean when using the term. For economists, demand means not just how much we are spending for a given item, but how much we are spending for that item at its price, and how much we would spend if its price changed.

There is a difference between “Demand” and “Quantity Demanded.” Demand refers to how much (quantity) of ammo is desired by buyers. The “Quantity Demanded” is the amount of ammo shooters are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. “Supply” represents how much ammo the market can offer. The “Quantity Supplied” refers to the amount of ammo producers are willing to supply when receiving a certain price. The correlation between price and how much of a good (like ammo) or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.

The Demand for ammo is the amount that buyers are willing to purchase and is determined by several factors. The Law of Demand says that when the price of a product (ammo) increases with no change in factors other than price, less product will be bought. So, Low price = more quantity demanded and High price = less quantity demanded. So, generally Demand for ammo works like this and greater quantities sell at lower prices and higher prices come from selling smaller quantities. But, there’s more to the story.

At lower ammo prices new buyers come into the market and those already buying, buy more (Example – compare 9mm ammo-Brand A at $16 a box with ammo-Brand B at $12 a box. At the lower price, shooters that had not been using Brand B would enter the market and more Brand B would be sold. At higher prices some buyers stop buying all together, and the others buy less. (The reverse of the previous example & where we are now.)

So if Demand for ammo is predicated on several factors other than price, what are they. The most important of these are the shooters preferences, tastes, customs, income level, the quality of the ammo being offered, and the availability of competitors’ ammo. All of the above are vital in determining the price that an ammo manufacturer can command for its ammo. This is true whether the business is an ammo manufacturer, barbershop, a graphic arts firm, or a firearm magazine manufacturer.

Often overlooked are shifts in demand which help determine Demand & result from changes in such factors as:

  • Shooters income;
  • Number of shooters;
  • Individual shooter feature preferences & tastes in ammo;
  • Competing ammo brands, quality, & their prices; and
  • Ammo performance & future price expectations.

Overlooked shifts which help determine Supply are:

  • Production costs & how much ammo costs to be produced;
  • Technology used in manufacturing certain ammo;
  • Manufacturers’ expectations about future prices; and
  • Number of ammo suppliers.

These factors can cause changes in the consumption of a given ammo without any change in the price of the ammo product. Such factors tend to change or shift the relationship between the price and the quantity demanded. (Example – Drop in ammo prices occurred when a recognized shooting expert reported on poor performance of Brand X Ammo and stated he would not use that ammo. This one expert caused a shift downward in price of that ammo.)

The Law of Demand partly explains the behavior of a wide range of individual ammo buyers. Those buyers have many differences in ammo preferences/tastes and income that can shift market demand. The Law of Demand attempts to explain the complex market including all of these differences. Shifts in the demand sometimes overshadow the effects of price changes. This has caused some who do not understand the concept of ammo demand to doubt that the law of demand is valid. So, consider the Law of Demand and the shift factors when understanding our current dilemma. Together, demand shifts and price changes account for any changes in demand for ammo or any given product.

Briefly, here are the four basic laws of supply and demand:

  1. If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium Price. (Seems to be where we are now.)
  2. If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
  3. If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
  4. If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

We want to reach the ammo Equilibrium point which is defined as the price-quantity pairing where the quantity demanded is equal to the quantity supplied.

Please understand that while Supply and Demand analysis is a useful precisely-formulated conceptual tool to help us gain an abstract understanding of a complex situation, it does not—nor should it be expected to—give us in addition an accurate and complete description of our actual existing ammo dilemma. So, realistically then what do we do now with the high price of ammo and all the uncertainty.

Dry Fire with Snap Caps

Dry Fire with Snap Caps

Given our current depressing gun control and limited/non-available ammo scenario and the need to regularly practice shooting skills and fundamentals, students ask me “what to do” and how can they “train with the shortages of ammo.” To me dry-fire practice with snap-caps with an unloaded firearm in the privacy of your home is a good, albeit not great, substitute for frequent live-fire range visits. Don’t become complacent and stop training, since your life depends on your skills and accuracy from practicing. I myself refuse to pay $1 a round for 9mm or $2 a round for .45 practice ammunition, if I can even find it. Luckily, I do have some available ammo, but use it mostly for my classes, and can hold out for a few months. I will wait for the demand to stabilize and be unchanged so supply will increase and a surplus occurs, which will lead to the lower equilibrium price and I’ll be a buyer then. Just my “10 cents minus 8 cents” biased opinion. How long? Who knows for sure!

Consider taking a class where the ammo is included in the total price

Consider taking a class where the ammo is included in the total price

Consider taking a class where the ammo is included in the total price, like my classes. The instructor probably has stockpiled some for students. At least you will be able to have ammo and shoot some. Hopefully, this current dilemma will change in less than a year, but I am “pessimistically optimistic,” given the many complex variables discussed and the whims of individuals. Hang in there and do your dry-firing at home and do a little live-fire training to reinforce your fundamentals and keep your skills up. See my article “Basic ’5 and 50′ Practice Drill to Conserve Ammo & Lower Costs.” Also, pray in your own way. SUCCESS!

© 2013 Col Benjamin Findley. All Rights Reserved. This article may not be reprinted or reproduced in whole or in part by mechanical means, photocopying, electronic reproduction, scanning, or any other means without prior written permission. For copyright information, contact Col Ben Findley at ColBFF@gmail.com.
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  • Andylit

    I suspect and expect the consumer panic mode to ease once the Senate acts (or fails to act) on the current crop of gun control legislation. The House will most certainly deep six any measure that is approved by the Senate, with the possible exception of expanding mental health reporting to NICS.

    • http://www.facebook.com/people/William-D-Tipton/100003696127931 William D Tipton

      If even one major gun point is passed, however, it’ll be no ammo for years to come because everyone will be buying everything in site while this tyrant is in the White House and still a threat to gun rights.
      I hope youre right, and based on what Ive been reading you likely are. If the Republicans and red state Dems do what they KNOW is right instead of some of them putting their tails between their legs like some Dems did over the health care vote, maybe things will be alright this time next year.

  • Cobrawing

    Once again Colonel you have given a most excellent explanation of the basic law of supply and demand, along with the other tangible and intangible varriables that are affecting this maddening situation. I agree with you that this is highly unlikely to get any better anytime soon and honestly we may well be SEVERAL years away from a return to normal as we once knew it . . . and it’s possible we may NEVER see a full return to that same normal.

    Based on the very set of factors you have laid out I have made the personal decision to severely cut back on my regular shooting at the range. I simply don’t want to burn through my critical reserves only to find things are NOT returning to the normal that I once knew. Regular firearms training is about to undergo a very long lasting change. Local ranges are experiencing a critical reduction in attendance and some may well go under. Like you, I’m saddened and intensely angered over all this but “it is what it is” I’m afraid. Every new day in this country brings yet another sad reminder that the world I once knew is slowly eroding away.

  • thetravlor

    My contact at ATK says between the Idaho and MN plants, they are making 6.5 million .22 rounds a week. There is a re-direct going on some where in the system if we aren’t getting any out here. Even the black market/auction sites don’t have any rimfire.

  • SKIPTORT

    SO HERE WE ARE AGAIN,, THE LITTLE GUY GETTING THE SHAFT. THE GOV’T IS SUPPOSED TO BE WORKING FOR US, NOT AGAINST US, GET THESE LIBERAL YO-YO’S OUT OF OFFICE, AND GET THE GOV’T TO START WORKING ON THE REAL PROBLEMS FACING US ALL, LIKE THE DEBT. INSTEAD THEY JUST WANT MORE GOV’T AND MORE CONTROL. IF IT WERE UP TO ME, I’D GET RID OF ALL THE FOLKS THAT HAVE PROVED, WITHOUT A DOUBT, THEY ONLY CARE ABOUT THEIR OWN RE-ELECTION, AND DON’T SHOW ANY COMMON SENSE. A GUY THOUGHT IF ALL THE PEOPLE ON GUAM MOVED TO ONE SIDE OF THE ISLAND, IT WOULD TIP OVER,,, ARE THEY KIDDING, WHY ISN’T HE REMOVED, DUE TO JUST BEING STUPID. HOPE TO VOTE OUT ALL THE DEADBEATS, AND FOLKS THAT ARE NOT LOOKING OUT FOR US,, BUT ONLY THEMSELVES, LETS GET HOT FOR TERM LIMITS, AND LEAVE OUR GUNS AND AMMO ALONE….

  • bigblue

    The COL’s analysis as to the causes of the currently dysfunctional ammo situation is accurate, assuming that we have a closed system within which the normal laws of supply and demand are valid. However, I am not sure that is the case, for several reasons. First of all, the recent huge government ammo buys might be an outside factor in the supply-demand equilibrium. Second is that I have heard “rumors” of federal attempts to influence the manufacture of ammo headed for the civilian sector. I have no idea as to the validity of these rumors, but if true and if they are having an impact, then this is an outside factor that disrupts the traditional Keynesian economic model. Finally third … as one of the comments indicated … there seems to be some sort of disruption in the normal distribution system, with ammo leaving the manufacture –> distribution to retail –> consumer path cycle and appearing on auction sites and other places. This leads to a REALLY squirrelly situation that has so many intangible factors as to make it impossible to predict. So the COL’s recommendations are true … take nothing for granted, tighten up on ammo consumption, and do not assume you will have easy access to “normally” priced ammo any time soon. The world is changing, my friends.

  • Mike

    Guess I need to learn to reload

    • http://www.facebook.com/frank.j.austin Frank J. Austin

      You cannot even find powder in many places.

    • Sherm Risdall

      Primers and bullets are very difficult to come by. There are so many different powders that you can usually find one that works. But you can’t make ammunition without primers, bullets, and powder. I would say the bullet shortage is the most severe at present, it’s even hard for those who cast their own bullets to find lead. This has caused prices to climb for presses, dies, and all the components. I don’t believe the government is buying up all the reloading components – it’s just an expansion of the general ammunition shortage and panic buying.

      • Disabled American Patriot

        I found somewhere that you can go to your local auto salvage and buy
        some lead weights and melt them and cold mold them and they work.

      • http://www.facebook.com/people/Scott-Schoemann/758619965 Scott Schoemann

        try finding a press even, they are made of commonly available metals, now THIS is something that just does not make sense…

  • Leadsender

    Reading all that made me feel like I was back in my college economics class. I have another economic theory. It is called when you say I can’t. When the government or anyone else says you can’t that makes you the average citizen want what every they say you can’t have that much more. Remember prohibition and alcohol. The same thing happen when you go to the dentist to have your teeth cleaned or an extraction. It seems that you are hungrier than ever and want to put anything in your mouth that you can. I want an assault rifle and another hand gun but, I am not going to be held hostage by the prices that THEY want to charge. I have cut back on driving because of gasoline prices and I can wait until gun and ammo prices come back to responsible range.

  • Doug

    The whole supply and demand problem is because the federal government buying 1,000,000,000 rounds. From what I understand there buying all hollow points, stating it’s for practice. You don’t use hollow points for practice. We need a congressional investigation as to why the federal government needs to buy rounds to kill ever United States citizen 5 times over.

    • http://www.facebook.com/people/Scott-Schoemann/758619965 Scott Schoemann

      If you are going to shoot hollow points you practice with hollow points. You practice with the load and round you shoot or you will miss when you need to shoot LEARN about firearms before you talk about firearms

  • Backwoodsman

    Stop selling to DHS and any other governmental unit that has bought there normal order plus 20%. Fill normal orders from the military and sell the rest to us. Question: why does the Department of Education need 60 swat type assault shotguns?

    • prasuncoli

      my neighbor’s sister makes $74/hr on the laptop. She has been unemployed for ten months but last month her income was $18800 jjust working on the laptop for a few hours. Read more on  Ask25.c­om

      • http://www.facebook.com/people/Scott-Schoemann/758619965 Scott Schoemann

        remove this spam and ban the spammer

  • southernman

    Hate to say this because I think everyone feels the same but, when and if we get past this shortage I will never be in this spot again! I know this will only cause more delay in the return of normal conditions. Never again people. Never to get short again.

  • thisismyspamemail

    Is there some way to make your own ammo? Forgive the question if it seems dumb. I own no firearms but would love to. I had not made the time to purchase or apply for any license to carry or anything yet. I do read the newsletter off and on when I get the chance so I’m just learning here so far.

    • Sherm Risdall

      Yes, you can reload your own ammuntion. I would recommend you start by buying a good reloading manual. A good manual will explain basic balistics, explain the equipment and components you will need, give you an overview of the reloading process, and provide reloading data for specific ammunition. After you have read the manual you can make a better decision on whether you want to reload or buy factory ammo, but the information you gain by reading will be worth the price of the manual. Reloading equipment can be purchased at most large sporting goods dealers, or online from some of the companies that specialize in reloading. Getting started in reloading is no longer a low cost undertaking. After you are familiar with the process you may be able to find someone who will let you use their equipment to reload, just be aware that not all reloaders place a high enough emphasis on safety.

  • Wyoh Knott

    There is no such thing as price-gouging. A sale means that the buyer valued the item more than the money exchanged for it. I would also point out that the higher prices are an incentive for manufacturers to ramp up production of the high-demand items and also attracts other entrants to the market – pushing prices back toward the marginal cost. Otherwise, pretty good analysis.

  • jr023

    I would bet the bill in FL will never get out of committee let along go to a vote that was from and east coast loony liberal from the most corrup part of our state

  • Sherm Risdall

    I agree the the majority, I believe the latest shortage was partly due to the big governent buy. They didn’t buy all the ammunition but they created a small buying panic, which spread as supplies started running low. There has been talk of manufacturing ammunition with microstamping which would make target shooting a thing of the past, banning some ammuntion, and additional taxes being placed on ammunition sales. We now have people hording ammunition that shoot less than 50 rounds a year. Add fears over new gun control legeslation and we have a wide spread panic for guns, ammunition, and reloading components.

  • Laurence L. Anderson

    Sadie. I agree that Emma`s rep0rt is really cool, on sunday
    I got a great Lotus Elan sincee geting a check for $5453 this-last/5 weeks
    and-a little over, ten thousand lass-month. it’s by-far the coolest job I’ve
    had. I actually started 8-months ago and pretty much straight away began to
    bring in minimum $78 p/h. I use this great link, fab22.comCHECK IT OUT

    • Disabled American Patriot

      Go pedal you scam somewhere else

    • http://www.facebook.com/people/Scott-Schoemann/758619965 Scott Schoemann

      Are you still renting yourself on third and Chicago?

  • http://www.facebook.com/people/Scott-Schoemann/758619965 Scott Schoemann

    Where did you learn the laws of supply and demand? the same school as Obama?
    the law of supply and demand is ALWAYS DYNAMIC in the model. As such,there is no fixed level in any of the three points of the law.
    However, in reality the supply is controllable as is the price, with demand the single MARKET variable. A manufacturer can increase demand by cutting supply, thereby increasing the price the market will bear. However Market competition will counter a single manufacturer’s attempt at this type of price fixing, therefore to maximize profit a manufacturer needs to be price competitive as well as able to meet the demand for the product. This alone removes the validity of the laws of supply and demand in production, where there is competition, as they ONLY reflect limited commodity products UNLESS there is some form of artificial market manipulation. BUT artificial market manipulation removes ALL “laws”, and as such there are no rules that can predict pricing. This is were we are at right now, with the government making excuses to buy up ammunition, as a back door attempt at gun control. And since the government has been writing contracts with ALL ammo manufacturers ( this was the giveaway that they were up to something), the competition is also removed from the picture