The .22 Ammo Shortage Mystery -- Solved!

Why is it so hard to find .22 ammo these days? The NRA explains why you are the reason you're paying high prices for ammunition.

Aug 31, 2014 at 11:35AM

Images

Wait? You mean this is all the ammo I get?! Image source: Wikimedia Commons.

This article was updated on Jan. 15, 2016. 

In 2014, CBS News spotlighted a growing shortage of .22-caliber ammunition -- a shortage that continues to this day. "One of the most popular and common" -- and cheapest -- calibers of ammo for hunters and target shooters alike, .22 shells are in short supply, reported CBS. Interviewing one supplier, CBS reported that while as recently as a couple of years ago it was still possible to buy .22-caliber ammunition "by the pallet-load... now they're putting restrictions on how much you can get and how you get that ammo."

They still are.

Despite a temporary respite in the availability of some calibers of ammunition circa mid-2015, American Rifleman now reports that the supply crunch is back. As of November 2015 at least, ".22 rimfire ammunition has evaporated again."

Retailers are shooting blanks
This is a problem for ammunition retailers -- and for gun owners as well. Statistically speaking, 24%-45% of Americans own guns either for self-defense or sporting purposes. But getting the ammo to load into those guns isn't always easy.

Wal-Mart Stores (NYSE:WMT) -- long the go-to spot for impulse ammo purchases -- instituted a policy in early 2013 limiting customers to buying no more than three boxes of ammo per person, per day. Wal-Mart lifted the restriction on most calibers of ammo in 2014 ... but kept it in place for .22 ammo. Other retailers have similar restrictions. And even when .22 ammo is obtainable, it costs more than it used to.  

Historically, .22 ammo retailed for about $0.05 a round. From 2008 to 2013, though, .22 ammo more than tripled in price. Today, it's not quite that bad. But even online at bargain-basement website gun-deals.com, the cheapest .22 ammo sells for $0.06 a round (and only when bought in bulk). Prices of $0.09, $0.10, and $0.11 are a lot more common -- twice the historical average. Even worse, popular online guns 'n' ammo website AIM Surplus advertises several varieties of .22LR rifle ammunition for sale -- but most are high-end .22 variants costing $0.20-a-round and up. Meanwhile, .22 ammo selling for under the $0.12 price point remains largely sold out. So don't count on finding $0.10 ammo easily.

Bargain

Once upon a time, Dick's Sporting Goods advertised a block of 525 .22 LR rounds for just $24.99. Those were the days!

Who's to blame?
Similar stories can be heard from owners of guns of all shapes and sizes -- not just .22s. For example, after skyrocketing in price through the end of 2013, Brown Bear 7.62x39mm rifle rounds (standard for an AK-47) are now entirely unavailable on AIM Surplus. All you can get today is cheap Russian Wolf-brand ammo... that costs a staggering $230 for a box of 1,000 rounds. Plus shipping.

Why is this?

National Shooting Sports Foundation public affairs director Mike Bazinet recently related how  "there are a lot of wild stories" about the ammunition shortage, with some people even blaming the U.S. government for "buying up all the ammo." But according to Bazinet, that's simply not the case. In fact, "government purchases have gone down over [the] last three years."

He may be right. In 2014, the National Rifle Association, or NRA, helped to debunk the "government conspiracy" thesis for America's .22 ammo shortage. Laying out the facts and figures in a multi-page spread in American Rifleman, the "official journal of the NRA," the NRA described how:

  • The dollar value of ammunition sales in America doubled between 2007 and 2012. Highlighting the obvious, the NRA noted that sales really "started to climb fast as gun sales began surging" in the run-up to the 2008 Presidential election.
  • Federal Premium Ammunition -- now a subsidiary of Vista Outdoor (NYSE:VSTO), according to S&P Capital IQ -- attributed ammo shortages to "high demand for our products," and said flat out that the biggest increases in ammunition purchases are coming from "the civilian market." (This means you.)
  • Olin Corp's (NYSE:OLN) Winchester Ammunition agreed that it is "experiencing an extremely high demand."
  • And privately held Freedom Group, which manufactures Remington cartridges, said, "it's clear to us that any lack of supply in the marketplace has been from consumer demand."

And then there was the interview with privately held Hornady Manufacturing. There, President Steve Hornady explained to the NRA, "People walk into the store, they don't see as much as they want so they take everything they can get. The next guy who comes in can't get anything, so he panics." 

Panic and prudent price-comparison habits rarely go hand-in-hand, of course. This naturally results in higher prices for ammunition.

What the future holds
Is there any end in sight? 2015, as you've probably heard, was a record year for gun sales and for FBI background checks on firearms purchases as well. As American Rifleman rightly points out, that's not a trend conducive to ending the run on affordable ammo. To the contrary, longtime gun owners must now contend with an influx of new gun buyers -- gun buyers who will presumably need to buy up and shoot through a lot of ammunition as they train to correctly operate their firearms.

At the same time, industry appears asleep at the switch, and little interested in doing what's necessary to respond to the increased demand of this influx of gun owners. AR notes that Remington (privately owned, according to S&P Capital IQ), Winchester (owned by Olin Corp (NYSE: OLN)), and Federal and CCI (both  Vista Outdoor (NYSE: VSTO) brands) all possess ammunition plants geared toward the production of rimfire ammunition. These plants have been running "full-out" producing ammo -- but they've been doing this since 2008, and haven't yet made a dent in the supply of .22 caliber ammo on the shelves.

One thing that could change the equation, and bring .22 prices back down to Earth (and put more ammo back on the shelves), would be for one or more of these companies to open a new plant. But AR laments that "no large American ammunition maker has added a new rimfire ammunition plant" in years. And given the high start-up costs of opening a new rimfire plant, and the risk that increasing production would flood the market and hurt profit margins, the companies have little incentive to do so.

Long story short, nearly a decade after the .22 ammo shortage first surfaced, it's starting to look less like an aberration -- and more like the new status quo.

The next billion-dollar iSecret
The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Ammo
Look, don't touch. Cheap ammo advertised on the web often comes with a disclaimer: "Sold out." Image source: Wikimedia Commons.

 

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers