October 22, 2019

Gary Marbut: Ammo Shortage a Supply and Demand Issue

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Folks,

Several of you have asked me what the cause of the ammunition shortage is.

The ammo shortage is nation-wide, and pretty much for all calibers. The shortage also includes ammunition components (brass, powder, primers and bullets) and all reloading equipment and supplies.

A part of the problem is the heavy federal government purchases, stressing an already-stressed marketplace.

However, the larger problem is the difference in elasticity between supply and demand.

The supply side is relatively inelastic. Manufacturers cannot increase production more than 30-40% before they begin exhausting their component suppliers. The component suppliers can’t expand more than 30-40% before they max out their material suppliers, all the way to the ends of the many supply chains. This is a usual rule for any type of manufacturing, and applies now in spades to ammunition. Manufacturers are running hard trying to satisfy demand. Hey, they’re in business and want to sell.

However, the demand side is VERY elastic, and driven by the psychological response of Americans to economic and political uncertainties. One supplier says he doesn’t have a shortage of ammunition, but a serious surplus of customers. As long as people have discretionary funds available and are stressed by political and economic uncertainty, or even by perceived political and economic uncertainty, demand for ammo will outstrip supply.

The only thing that would turn this around in the near future is if conditions change to remove or moderate the perception of economic and political uncertainty in the U.S. Frankly, my crystal ball doesn’t see that happening any time soon, unfortunately. If authorities would imprison a slug of high mucky-mucks in D.C., things might cool down, but I’m not holding my breath waiting for that.

Gary Marbut, President
Montana Shooting Sports Association
http://www.mtssa.org
Author, Gun Laws of Montana
http://www.MTPublish.com

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