Supply and Demand Today

Unless you've been living in a cave for the last year or so, you'll have noticed that things are changing. The “pandemic” has seriously affected the world economy and some of the follow-on effects are just now making themselves felt. Add to that the recent surge in hackers of unknown origin breaking into and locking down computer networks, holding them for ransom paid in hard-to-track cryptocurrencies, and a lot of things are starting to become scarce or at least more expensive. Let's look at a few cause and effect situations.

Housing

Rent and mortgage rates are rising faster than income. This is due to a lot of separate things going on right now, none of which are going to end in the near future. 

• Supply of new homes is limited because of a slowdown in construction. With everyone being locked down in their own homes, a lot of workers weren't available to build the new houses.
• Construction material prices are going through the roof for a couple of reasons;
• Businesses like lumber mills had to deal with lock-downs.
• Shippers are having to pay more for fuel (more on that later).
• Warehouses and lumberyards lost a lot of their entry-level staff to increased unemployment payment. It pays better to stay home than it does to work low-paying jobs in a lot of markets.
• Demand is high due to people staying home and starting home improvement jobs.
• Rumors of investors buying real estate to offset losses in their normal markets are floating around on the conspiracy sites. I don't know how much credence to give such rumors; I try to stay out of the stock market and other gambling halls.
• Inflation is gathering speed, so people are putting their money into housing and real estate since those are tangible assets that rarely have zero value. Paying off a mortgage in inflationary times means using money that is worth considerably less as the loan matures.

Electronics

• Ever since someone figured out that you can repurpose computer graphics cards and main processors to “mine” for (create) cryptocurrencies, the suppliers of those chips have been struggling to meet demand.
• Since every new car/truck made today has several computers built in, the lack of processors has limited the number of new cars available. This is driving up the prices of clean used vehicles and killing the new car sellers. When most of your paycheck comes from commissions of sales and there is nothing to sell, you're looking for a new job or unemployment.
• People being locked up in their homes has led to a surge in sales of new electronics as they upgrade their entertainment and networks to be able to work from home. Increased demand in times of reduced supply equals higher prices.
• A fire at one of the major producers of the polysilicon which is used to make chips is going to further reduce the supply, meaning prices will go up even more. Solar panels use the same material, so expect a price jump in that market.

Firearms and Ammunition

This is a strange one. 

• We have had several different political changes is the last 10-20 years, but nothing seems to be curtailing the sale of guns and ammunition in the USA. Threats to gun rights? Sales go up. Those threats go away? People restock, so sales go up. New threats to owning certain guns? Sales go up again. Bad times mean people buy guns for protection, and good times mean they buy the ones they want. Gun makers are having a hard time keeping product on the shelves.
• Ammunition factories are running 24/7/365 and can't keep up with demand, which means the price goes up. Scalpers buy in bulk and resell at high prices, further raising the market prices.
• We consistently set records for guns sales every month. People are buying a lot of guns. More first-time gun buyers means more consumers of ammunition, so demand goes up which reduces the supply and raises the prices.

Fuel Prices

• We went from being energy independent for the first time in 40 years back to importing oil faster than I thought possible. Pick your reasons for this, but it means a loss of jobs and an outflow of money. Money sent overseas only comes back if we have something to sell, which is difficult when the country is locked down and businesses are closed.
• Hackers shutting down a major pipeline company on the east coast didn't help anything. We use pipelines because we can't move enough petroleum by road or rail to meet demand. Prices increased, and there were a few states that were having a hard time getting fuel at any price for a month or so.
• New oil exploration has been shut down as well as new pipelines. I just saw an article today that the Keystone XL pipeline, which has been a political football for years, was finally killed for good. The company building it has given up and will soon be dismantling the portions that it had been able to build. Reduced supply without a reduction in demand means increased prices.
• People staying home and ordering everything online has meant an surge in delivery companies. Since UPS, FedEx, USPS, and all of the others use fuel of some sort, the demand has stayed fairly consistent. A delivery truck is going to burn about as much as a personal vehicle going to a store.

Food

• Another target of the “ransomware” attacks by hackers was JBS, a company that provides about 20% of the beef and pork on the American market. Any time you threaten 20% of a market, prices are going to go up sharply, and any ransom paid out will be passed on to the consumers in increased prices. We'll also get to pay for any new security for their computer networks.
• Beef and pork prices were already rising due to staffing problems in the packing plants. COVID-19and various government regulations had a huge impact on the people that work in those plants, slowing production and therefore reducing the supply.
• A lot of small-business food shops went out of business due to the lock-downs, because no customers means no income. This may recover in a year or two as new people reopen shuttered shops, but we'll have to see if the investment capital is going to be available.
• Several statements from government officials about cutting the consumption of meat have caused concern in the industry as well. We're likely to see a war between the lobbyists soon: the beef and pork producers have an established position with politicians, but the New Green Deal proponents have deep pockets.
• Prices on commodities like corn and soybeans have doubled in the last six months. I deal with farmers every day and they're happy to see the extra income, but their costs are going up just as quickly. Last year was a below-average year for yields, so there's not much left in storage, and this year is shaping up to be a repeat. If harvests are down again this year, prices will stay high and be passed on to us, the consumers.

As preppers we can control supply by growing or making our own things, and we have some control over demand by switching up our preferences. Prices only matter when we have to go to outside sources, so being able to limit that reduces our exposure to inflation and scarcity. Stock up when prices are low and supply is high for the times when they flip the other way.