If you’ve spent any time online, at your favorite gun shop, sporting goods store, or attended a gun show lately, you have experienced hoards of people buying guns and ammunition at panic levels. Supplies are depleted and now back orders are not allowed on most websites due to uncertainty of resupplies. Many are accusing traders and honest dealers as being in the “price hike” game, or “rip-off” artists. Perhaps these uninformed accusers missed economics 101.
The simple fact is that because of a perfect storm of political winds, threatened supplies, tragic events, huge demands, and limited production, the firearms and ammunition markets are not keeping up with current demand and won’t into the foreseeable future.
In December of 2012, the National Instant Check System (NICS) processed 2,581,794 background checks according to the FBI website. Each check is for one buyer but potentially that buyer could purchase more than one firearm at a time. Add in private sales, and the actual number of firearms sold last month could well approach or easily exceed 3 million.
There are an estimated 250-300 million firearms in the country according to various sources. From these numbers, it is safe to estimate that around 1% of all firearms EVER sold in the HISTORY of the country were sold in the last month!
Using the number of 3 million firearms being sold in December, let’s take an educated guess as to how much ammunition it will take to feed these new purchases. Let’s assume that two-thirds of the buyers already have sufficient stores of ammunition and further assume that the remaining one–third of buyers purchase an average of 200 rounds of ammunition. That’s TWO HUNDRED MILLION rounds of NEW ammunition required just to feed the firearms purchased last month! Even if a plant could produce one million rounds per day of ammunition, it would take well over half the next year just to produce enough ammunition to feed one-third of the new firearms purchased last month. This does not even take into consideration the hundreds of millions of firearms already in service.
It will take months if not years to catch up with the demand placed on the system just within the past couple of months. Adding production capacity to existing plants will take a year or better from the drawing stages to the point where actual product is being manufactured.
This is where economics takes over. As supplies continue to diminish, sellers will place more and more value in existing stocks. Prices will rise (as they have been) to match demand. Higher prices will eventually slow demand and hopefully allow supplies to stabilize and producers to catch up. I predict this will take many months if not a year or two.
However, many more factors can change this outcome. Further restrictions on purchases, laws threatening the ready supply of products, components shortages, and more factors could further restrict supplies and production.
Consider the shortage of .22 rimfire cartridges. This shortage is easily explainable. It would be easy to assume that of the 100 million firearms owners, the vast majority of them own at least one .22 rimfire. If even a small percentage of these owners decided to “stock up” on .22 rimfire, (say purchasing 500 rounds), then within days, the shelves would be empty and supplies diminished. Have you seen any .22 rimfire ammunition lately?
So what does all this mean?
Americans aren’t taking the gun ban talk lightly and are literally buying items as one would prepare for war. Think about that for a minute.
Second, if you believe that this is a fad, or temporary run, and will correct itself in a few weeks or months, let me know how that works out for you. You’re probably the same fool who believed that Obama wouldn’t come after your guns in a second term. Don’t get your panties in a wad when in a few months, an AR-15 and the ammunition to feed it costs double what it does today. You were warned.
And finally, quit your crying about the “price hike bandwagon” and just admit that you should have listened better in Economics 101 class. If you waited too long to buy, then boo hoo for you. Welcome to the world of capitalism. And, if you think it’s bad now, wait until the dollar collapses.
For those of you who have adequately prepared and are well supplied to ride out this storm, congratulations. Make sure you apply the same line of thinking to other necessities and you will be well prepared for the next storm brewing.
Image: courtesy of http://irjci.blogspot.com/