(Thank You Ammunition “Price Gougers!” First posted 5-22-13)
After the unfortunate incident in December 2012 in which children were killed by a violent man in a school setting, many speculated government intervention in firearms and ammunition ownership. This triggered a nationwide scramble as these speculators purchased all existing stores of ammunition and of certain firearms. Some purchased them simply to store them for future personal use, while others speculated that prices would increase and they would be able to sell these items for a profit. While demand had greatly increased in a matter of hours, the supply schedule cannot change as quickly as demand schedules can, hence the shortages and price increases. To put simply, the minds of everyone (demand) can change much more quickly than the ability to produce the ammunition (means).
Fast forward to six months later, in May 2013, certain types of ammunition were not available at any stores. Small shipments would come in and within a few minutes, all of the ammunition would be sold out. Large organizations like Cabela’s, Cheaper Than Dirt and others simple could not keep ammunition in stock. A box of .22LR ammunition that sold in November 2012 for $20, was sold privately in May 2013 for $110. Some shooting enthusiasts could be heard grumbling that, “people jacking prices up like that are criminals.” When hurricanes hit, those that have speculated in generators and water are called the same. Is this a proper sentiment?
As the world’s largest Luxury Entertainment Shooting firm, the ammo crunch has been a financial hard hit for us. Paying double for most ammunition and sometimes 500% more than projected has been unfortunate, but we honestly appreciate and celebrate the speculators! Why?
The basic economic concept of supply and demand and allowing a market to fluctuate and find equilibrium on its own is a large factor. While the American ammunition industry operates on a partially free-market system, it is not fully free market. Being “Free Market” is kind of like being “Not Pregnant.” Even being a tiny bit pregnant or regulated changes the classification. The amount to which the American ammunition market is “free” is the amount to which it “works.”
Some say that ammunition is “not available.” This is not accurate. Just as oil, trees, gas or other scarce things of value are also consumed, production is modified by entrepreneurs based on the signals in the market, such as the increased prices from shortages like those in the ammunition industry.
Example. A lady that bought 50 rounds of .22LR ammunition at 5-cents per round in 2012 skipped having a latte to purchase the ammunition. She preferred to have 50 rounds of ammunition to having $2.50 in her pocket or a yummy latte. It was worth it to her to go without a treat because someday she might want to use or sell the ammunition. In May 2013, when the ammunition could be sold at 20-cents per round, she was faced with another decision, “would she rather have 50 rounds of ammunition, $10 in her pocket or 4 lattes?” As a business desperately seeking ammunition to fill clients needs, we are faced with a decision, “would we rather have $10 in our pocket or 50 rounds of ammunition?” The lady speculator and our business ARE “the market” in this example. Only we can decide what we value most. She is not evil for accepting $10 any more than she was evil in 2012 when she paid only $2.50.
So, what if we asked an FTC or ATF or DHS or some other State acronym to set prices, would that solve the ammunition problems? Absolutely not! Things are going exactly as they should (minus interventions that industry insiders recognize are altering market conditions). As ammunition manufacturers see large profits, they have ramped up production, and in less than 1 year I am confident that ammunition will again have reached an equilibrium.
If a “proactive” State had passed a law saying that .22LR ammunition could not be sold for more than 10-cents per round, the lady in our above example likely would not have been interested in selling her stash. Our firm would not have been able to acquire ANY ammunition! I am truly grateful for speculators! I say, “Thank You Ammunition Price Gougers! Thank you, thank you!”
Some small gun shops have kept their prices low as a public relations investment to let their customers know that they will not be gouged. These stores do not have any ammunition to sell. Others have raised their prices and guess what, they have ammunition for sale! Both choices have merit and I appreciate the wisdom in both. My thanks however, goes to the shop that sold me ammunition. My thanks goes to the many speculators on gunbroker.com and other online auction sites, to the gun show vendors and to all others that make honest and voluntary transactions with another party that leaves both parties walking away believing THEY got the best deal. If Cheaper Than Dirt is not using force to sell their valuable inventory; I have no beef with them!
We would all like to be paid as much as possible for what we sell. We would all like to pay as little as possible for what we buy. What is possible? Only a free market can tell us. Only a free market can make it possible. It isn’t always fun, but it is fair, right and is part of being free. Thank You Ammunition “Price Gougers!”
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