The Dismissal of Pre Panic Prices

[Cpt]

While I was in the LAX ammo a guy behind me brought up a interesting idea. His point was that prices for guns and their related accessories will drop back down eventually. However, after the raise in prices from the panic it has been shown people are willing to pay ridiculous prices for guns. So when reason comes back and prices begin to go down they are unlikely to good back to what they were pre panic. Both manufactures and retailer are likely to come to the conclusion that they too can raise their bottom price well above pre panic.

It would be kind of like gas prices, which will never go back down below $2/gal. People are willing to pay nearly $5/gal and oil companies know it.

Does anyone out there think price will drop back down to pre panic rates or will they never be the same?

[FNH5-7]

I sure as hell hope they go back to pre panic prices

I hope that high prices do not become the new standard.

[kygen]

once panic buyers stop buying en masse, stores will be left with product on their shelves they cant move so easily as they once did. prices should drop after that hopefully

[beretta929mm]

Current frenzy demand can not sustain for long.
Inventoy will catch up as demand slides

[Fishslayer]

Ammo is a bit different from fuel. I don't need ammo to get to work.

Barring some sort of legislation ammo prices should go back down to near pre panic prices.

A ban on internet sales & PPT would drive prices up. A ban on imports would make Russian x54R like gold.

.22LR has me flumoxxed, but the WalMarts I frequent have always been kind of hit or miss as far as what might be in stock on a given day.

If difi & moonbeam pull something I envision a series of Calgunner road trips to AZ.

[border.bandito]

i'm not so sure anymore.
i keep seeing all these posts about the panic eventually dying down...but here we still are.

if anything is learned from this, it should be this;
they dont have to take away our guns...they can just take away our ammo

[NikePenguin]

...a guy behind me brought up a interesting idea....

The guy behind you knows nothing about economics (and competition).

Kygen and berreta are correct.

[Fishslayer]

i'm not so sure anymore.
i keep seeing all these posts about the panic eventually dying down...but here we still are.

It's been 6 weeks. Sheesh...

The last Great Ammo Drought didn't really subside till about 2010-ish.

[TANK]

this is for stocks but some relevance in our current environment i think, i may be wrong

Let's consider some of the principles that explain the causes of shortages and surpluses and the role of speculators. When a harvest is too small to satisfy consumption at its normal rate, speculators come in, hoping to profit from the scarcity by buying. Their purchases raise the price, thereby checking consumption so that the smaller supply will last longer. Producers encouraged by the high price further lessen the shortage by growing or importing to reduce the shortage. On the other side, when the price is higher than the speculators think the facts warrant, they sell. This reduces prices, encouraging consumption and exports and helping to reduce the surplus

[SilverTauron]

A couple of quibbles with that analysis.

One , guns are not a material need for day to day life in the way oil is. For practical purposes AR15s are luxury items , albeit luxury items with very practical applications. Once the gun control proposals in DC die in committee, we'll see people start selling rifles to fund more immediate priorities like clothes for the kids and so forth.

Barring adverse legislation or another spree shooting, prices WILL go down.

However, the other side of the market is the supply aspec.In looking at it , the panic has all but destroyed the supply chain. Parts manufacturers are back ordered until deep into 2014 on AR components. So long as lower receivers and components are impossible to find on the shelf , ARs will remain at $2000 per rifle, because that's the only way you'll get a complete weapon before summer 2014. If I had to guess, summer of next year would be the soonest the market on these weapons will stabilize, and by that point good old inflation will do its dirty work. The days of $700 bare bones ARs are over, because the inflation adjusted 2014 equivalent value will be $1100.

[Creeping Incrementalism]

While I was in the LAX ammo a guy behind me brought up a interesting idea. His point was that prices for guns and their related accessories will drop back down eventually. However, after the raise in prices from the panic it has been shown people are willing to pay ridiculous prices for guns. So when reason comes back and prices begin to go down they are unlikely to good back to what they were pre panic. Both manufactures and retailer are likely to come to the conclusion that they too can raise their bottom price well above pre panic.

It would be kind of like gas prices, which will never go back down below $2/gal. People are willing to pay nearly $5/gal and oil companies know it.

Does anyone out there think price will drop back down to pre panic rates or will they never be the same?

Gas stays high because of a limited supply--all the easy to extract reserves are already tapped. Now the oil companies are going after the expensive stuff like oil sands. There is no such restriction on ammo, and ammo contains only modest commodity amounts. For example, 308 cartridge metallic commodity costs come to around $100 per thousand, with the price swings in copper typically amounting to only about +/- $30 per thousand.

Also, we don't HAVE to constantly use ammo. Once we stock up, the ammo can just sit there for 30 years. Gas must be used constantly.

Basic economic theory shows that a move in the demand curve will cause an equal move in the supply curve since we have no supply constriction. We will end up at the same price but with a greater quantity available (see graph below). The only question is the amount of time it takes to set up more loading equipment at the factories.



As panic demand drops back, we might very well see a huge glut in ammo, just like the bubble bursting with any other kind of "irrational exuberance". It all depend on the timing of waning panic vs. loading machine setup time in the factories.

The same hold true with magazines, which also use essentially costless components (steel or plastic is super cheap compared to copper/brass) and simple equipment to manufacturer. Also, they don't get used up like ammo so the supply will remain perpetually high even as demand comes back down.

Guns will be like mags but with an even greater permanent supply.

I'm wasn't an econ major in college but did take some courses, and everything I know points to a price collapse to a point below pre-panic levels, probably in 2014.

For us Californians, however, if new state laws get passed before then it may be difficult for us to take full advantage of the price collapse.

[nitrofc]

The new gun owners addiction could fuel higher prices for years.
And God only knows how many new gun owners just jumped on board.

[wild_weasel]

I live in Orange County but am in Eastern Virginia for work. On the weekend and after work I check out the local Dick's Sporting Goods and Bass Pro. While the Dick's usually gets there shipment of ammo on Friday the Bass Pro puts things out at all hours as they come in. Over the past three weeks I have shipped home 32# of ammo I bought at MSRP at a cost of $62 for two shipmments, money well spent. There is a lot of product out there at pre insanity prices but you have to keep your eye out.

[compulsivegunbuyer]

If prices stayed at these levels, you would simply have a large percentage of people loose interest. All I need is a few thousand rounds, which I already have, and just stash it away for the next earthquake. I mean really, $500-$1000 for a range trip, I'm sorry, but shooting aint that fun. How long do you think the new shooter is going to keep interest, when they have to go on a quest to find ammo, and when they do, it costs as much as two car payments. Not long. It aint gas, and it aint food.

[Standard]

If prices stayed at these levels, you would simply have a large percentage of people loose interest. All I need is a few thousand rounds, which I already have, and just stash it away for the next earthquake. I mean really, $500-$1000 for a range trip, I'm sorry, but shooting aint that fun. How long do you think the new shooter is going to keep interest, when they have to go on a quest to find ammo, and when they do, it costs as much as two car payments. Not long. It aint gas, and it aint food.

Yup.