Powerline’s Out of Ammo… Because They Didn’t Buy It Cheap And Stack It Deep

Posted: February 3, 2013 by ShortTimer in Economic freedom, Economics, free markets, Government, Guns

Seems John Hinderaker at Powerline was a bit surprised this week by something he’s already covered.  Recently:

I really, really wanted to shoot today, but wasn’t able to. Why, you might ask? Was I backed up with work? Nope. Did I have a long list of chores to do, to stay in my wife’s good graces? Nope. I was free as a bird. But I couldn’t shoot because, with the exception of 100 rounds of 22LR and the loaded 9 mm magazines that I keep at home for purposes of self-defense, I was out out of ammo.

Nor was I alone. The shelves here in Minnesota are empty.

So what is going on? In part, certainly, the perception of a potential shortage due to the policies of the Obama administration has led to the reality of a shortage, as everyone started to stock up. I can understand the mentality: if I wandered into a gun store and found that they had just put 1,000 9 mm rounds on the shelf, I would buy them all. But does that fully explain what is happening?

To a very large degree, yes.  Remember, this is what 1100 rounds of .22s looks like:

1100 rounds

A few years ago, each box would run about $10.  Today, they each run about $20.  So altogether, you can pick up 1100 rounds of .22lr for about $40, if you can find it.

1000 rounds of 9mm isn’t that big, either.lego indy 22lr 9mm ammo

That’s 500 there, at about 7-years-ago prices, as compared to a 550 box of .22lr and Indiana Jones.  Just double the stack, and that’s 1100 and 1000 of each.

You can still find a few rounds of .380, .40 and even .45 caliber bullets, along with more exotic varieties, but the most popular ammunition–22LR and 9 mm–is sold out everywhere. The shelves are literally bare. Every now and then someone gets in a small shipment; a friend told me that a local Dick’s Sporting Goods got some 9 mm bullets in yesterday. They were gone almost instantly.

I’ll assume here that he means ammunition where he says bullets, and chalk it up to the desire of English speakers to use different terms rather than repeat the same one over and over again.  There is a difference between a cartridge (round) and a projectile (bullet).  Reloaders are the folks who are running into bullet, powder (to a lesser degree) and primer (to a greater degree) shortages.  Also, this may be a regional shortage, as .45 is by no means unpopular.  .380 ammo was in very high demand over the last few years as Ruger’s LCP took off, driving a large part of the concealed carry market to .380 – and emptying shelves.  .380 is only around now because supply finally caught up with demand.

Hinderaker looks to be an example of one of the awakening gun owners who are just now still realizing the gravity of the situation by the readily apparent economic situation.  A month ago, he said this while writing “Barack Obama, Ammo Salesman“:

There is something seriously wrong when Americans have to stand in line to buy ammo. But I can confirm that the shortage is spreading rapidly. My son and I went shooting at the GanderMountain Store in Lakeville, our usual haunt. I was running a little low on ammunition and thought I would pick up a box of 9 mm ammo on the way in. Forget it. Not a single 9 mm bullet in the store. No 22LR either, if you can imagine that.

Totally can imagine that.  The line is an indicator of the market – and shouldn’t be a surprise.

When we were done I tried the Fleet Farm across the highway, too: not a single 9 mm or 22LR bullet to be had.

Mr. Hinderaker, you know how I know you don’t shoot much?  You went to buy a boxA box.  Even the biggest box of Winchester white box 9mm is only 100 rounds.  For serious shooters, that’s not much to go through in a very short period of time.  Doing just a few drills will burn through that quick.  It also doesn’t supply you for more than a trip.  Serious shooters know this creed:  Buy it cheap, stack it deep.

You know the second reason I know you don’t shoot much?   You went to Gander Mountain before you went to Fleet Farm.  Unless your local Gander Mountain is an aberration, it probably pales in comparison to Fleet Farm.  Also, in the last month, Mills Fleet Farm went so far as to make a long pro-2A video as an open letter to their government officials from Minnesota.  Given those two choices, I’d always go to Fleet Farm (and have).

That Fleet Farm is out of ammo is a pretty big sign, but it’s also indicative of the customer base.  Folks who go to Fleet Farm already know to buy it cheap and stack it deep.  As one example, Fleet Farm used to (and probably still does, occasionally) carry milsurp rifles like Russian Mosin-Nagants, for which the cheapest ammo can be had by buying Eastern European 440-round tins (spam cans).  If you spend 80 bucks you have enough ammo to last for at least a few trips to the range.  As a non-gun related example, Fleet Farm sells everything from military surplus to snacks in large amounts at cheap prices – and that’s indicative of a more thrifty mindset.  It’s like comparing Sam’s Club or Costco to a corner store – they may have the same product, but one has paper towels in 2-packs, the other in 20-packs at a discount.  Same financial principles apply to ammo.

Most Americans, and certainly Minnesotans, are familiar with this image, and know exactly what to buy the most of:

oregon trail store

The issue is that people today are buying cheap and stacking deep – the market for the last decade has taught them.

Folks who’ve been firearms enthusiasts for a long time have their own supply from which to shoot.  That’s why they buy in bulk.  The rest of the nation, seeing that there have been shortages, is now catching on.  You don’t buy 1000 rounds of .45 because you’re going to go fight the Taliban with your 1911.  You buy it because every range trip is 100-200 rounds, and stores don’t always carry ammo.  Metals prices fluctuate, the dollar fluctuates against imported ammo (which can also be outright banned by import restrictions), surplus ammo dries up as supply is exhausted, and inflation drives prices up.  There are other economic factors as well – in the current case, there’s a much, much greater demand than there is supply.  Folks who shoot a lot have seen this in the last decade.

If you scroll back up to that slightly fuzzy image of Indiana Jones on the box of 500 9mm rounds, note the price.  Yes, that says $60 for 500.  That’d be $6/box.  You won’t find that price anymore, not even for cheap Russian Silver Bear.

Dick’s Sporting Goods used to have sales on Remington UMC 9mm ammo – brass cased, quality ammo – for $5/box as late as 2006.   The skyrocketing metals prices of the mid-90s caused ammo to shoot up in price – and anyone who shot a lot, or though they might shoot later in life, even – knew to start buying.  Of course now they’re getting out of the firearm and ammo market as Dick’s has gone limp due to political pressure.

Hinderaker now says he’d buy 1000 rounds if he could find it.  He’s a casual shooter who’s now been taught a harsh lesson by the market.  He gets it now.  His casual attitude towards firearms as something that will always be there has changed with the market.  He’s well on the road to learning to buy it cheap, stack it deep.  Multiply his casual shooter realization times millions of gun owners and yes, you pretty much have the answer for the current ammo shortage.

On a slightly different note, Hinderaker mentioned this a month ago:

So, in our effort to be scrupulously fair to President Obama, we can no longer say that his policies have uniformly been catastrophic for the economy. No: from now on, we must admit that he has been an unprecedented boon to manufacturers of firearms and ammunition.

All Obama’s done is introduce uncertainty into the gun & ammo market.  People are buying because of uncertainty over governmental policies, inflation, metals prices, how international trade will mess with those prices, as well as concern for future governmental interference in the market (in violation of the Second Amendment), and so on.  That massive uncertainty has driven up demand, but also screwed up the supply side of the equation.  Manufacturers aren’t going to go out and start investing in new CNC machinery to provide more capacity.  They don’t know if they’re going to be driven out of business, have the banks they put their money in threatened, or have the banks freeze their assets entirely due to politics.

I know Hinderaker was joking there a bit, but looking at it seriously, it’s not a normal market boom at all.

Hinderaker finishes yesterday’s post with this:

How about the fact that government agencies are buying up billions of rounds? There have been lots of news reports and lots of rumors, but no clear explanation of why the federal government has invested so massively in ammunition–including the most popular civilian calibers–over the last year. One way or another, it seems that there is a story here. But for it to be pursued, we would need “reporters.” Remember them? Nah, that was a bygone era: you probably don’t.

This has been asked and answered a few times.  I’ll go back to my original answer here.  And I addressed the Social Security Adminstration’s ammo purchases here.  For the most part, it’s still the case.  Is it worth asking about, sure?  But is it necessarily sinister, no.  Is it enough to change the market dramatically?  I’d say somewhat, but I doubt it – even government agencies are having a hard time getting ammo, because their budgets are cut back, too.  Contracts made doesn’t necessarily mean contracts filled, either.  And US govt. agencies aren’t buying Wolf’s or Golden/Silver/Brown Bear.

Is there a story there?  Maybe.  Is it just a story of how “buy it cheap, stack it deep” works for everyone?  Probably.

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