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Taxonomizing Price Shocks

Blame the supplier, blame the regulator, or blame the customer?
Planted: 2026-10-26
Last tended: 2026-10-26

When something gets scarce or expensive, the anger almost always lands sideways - on the other buyer in line. I call this demand-scolding.

Sometimes the buyer next to you really is the problem. Usually, the choke point sits upstream. Here is a field guide to shortages and price spikes, sorted by who actually deserves the blame.

Choke Point Diagnostic Tell What Fixes It
🏭 Supplier Prices jump, margins expand, and unit output stays flat; or wafers and lines are reassigned upstream before a retail SKU is ever made. Signed long-term volume contracts that take glut risk off the manufacturer, or new entrants breaking concentration.
👮 Regulator Prices are capped below clearing levels, causing local dry-outs and hoarding, or new supply sits in a multi-year permitting queue despite buyers paying up front. Lifting price and allocation controls so arbitrage works; clearing permitting and interconnection queues.
👤 Customer Rivals buy the identical finished SKU out of the same retail channel faster than factories can ship, or arbitrageurs hoard stock solely to resell. Factory volume eventually drowning out inventory hoarding.

Blame the Supplier#

Look here when a handful of firms control production, barriers to entry run into the tens of billions of dollars and multiple years, and a demand surge gets harvested as margin instead of answered with volume.

1999-2002 DRAM Price-Fixing Cartel#

From April 1999 to June 2002, memory makers conspired to fix the DRAM prices they charged Dell, Compaq, Hewlett-Packard, Apple, IBM, and Gateway.

  • The convictions: Infineon pleaded guilty in 2004, paid a $160 million fine, and saw four executives sentenced to between four and six months in prison. Hynix, now SK hynix, pleaded guilty in 2005 and paid $185 million. Samsung pleaded guilty in 2005 and paid $300 million, which the Justice Department called the “second largest criminal antitrust fine in U.S. history,” and in March 2006 three Samsung executives agreed to serve seven or eight months in prison and pay $250,000 apiece. Twelve individuals and four companies were charged, with total fines exceeding $731 million.
  • The informant: Micron paid nothing. It cooperated under the Justice Department’s Corporate Leniency Policy and, by its own account, escaped “prosecution, fines, or other penalties.” Its CEO, Steve Appleton, acknowledged that “the DOJ’s investigation revealed evidence of price fixing by Micron employees and its competitors.” One Micron regional sales manager pleaded guilty to obstruction and received six months of home detention after withholding and altering subpoenaed grand jury documents.

2008-2012 DRAM Glut and Consolidation#

Why do memory suppliers hesitate to build ahead of demand? Because the last full capacity race killed the losers and shrank the industry to three main survivors.

  • 2008 crash: After an industry-wide race to add capacity, DRAM prices fell nearly 75% in 2008, and memory makers lost more than $8 billion across the first three quarters.
  • Qimonda: In January 2009, Infineon spin-off Qimonda filed for insolvency with 12,000 employees, blaming “the massive drop in prices in the DRAM industry.”
  • Elpida: In 2012, Elpida filed for bankruptcy with $5.6 billion in debt, the largest bankruptcy by a Japanese manufacturer at the time. Micron bought Elpida out of bankruptcy, and Elpida’s fabs added roughly 45% to Micron’s manufacturing capacity.

2016-2017 DRAM Parallel Cuts#

Buyers sued Samsung, SK hynix, and Micron over parallel production cuts in 2016 and 2017. A federal district court dismissed the case, and in March 2022 the Ninth Circuit affirmed, ruling that the cuts were “more likely explained by lawful, unchoreographed free-market behavior” in a concentrated industry, even after weighing their “criminal history from twenty years ago.”

Under U.S. antitrust law, conscious parallelism - three companies in a concentrated market looking at the same margin math and independently choosing not to expand - is not itself unlawful, and produces the same supply restriction as a cartel without a phone call.

2025-2026 DRAM and HBM Crunch#

In the first quarter of 2026, TrendForce reported that three firms controlled 89.7% of global DRAM revenue: Samsung at 38.5%, SK hynix at 28.8%, and Micron at 22.4%.

2026 Nearline Hard Drive Allocation#

Early in 2026, Western Digital’s CEO stated that the company was “pretty much sold out for calendar 2026,” with long-term hyperscaler agreements already locked in for 2027 and 2028, and consumer products accounting for just 5% of revenue.

Blame the Regulator#

Look here when prices are forbidden from clearing the market, when supplies are rationed by historical formula rather than current need, or when buyers are ready to finance new capacity that cannot get permission to connect.

1971-1981 U.S. Gasoline Price Controls#

The 1973 oil crisis is remembered for the October 19, 1973 Arab oil embargo, a genuine supply-cartel shock that sent crude from $2.90 a barrel to $11.65 by January 1974. Look closer at the domestic gas lines, however, and the distribution breakdown was regulatory.

  • Shortages preceded the embargo: Nixon froze wages and prices on August 15, 1971. By February 1973 - eight months before the embargo - Senator Henry Jackson was already warning Congress of “an unprecedented breakdown in our energy supply and distribution system.”
  • Federal demand-scolding: On November 25, 1973, Nixon went on television to announce Saturday-night-to-Sunday gas station closures, a 50 mph speed limit, thermostats lowered by six degrees, and dimmed White House Christmas lights, asking Americans for “the spirit of discipline, self-restraint, and unity.” Congress fixed the national speed limit at 55 mph in January 1974, where it stayed until 1995.
  • Allocation by 1972 formula: Two days after his speech, Nixon signed the Emergency Petroleum Allocation Act, which distributed fuel according to what each region had purchased in 1972.
  • Misallocation data: A 2026 paper by Brian Albrecht, Alex Tabarrok, and Mark Whitmeyer analyzed the February 1974 station surveys: the national gasoline shortfall was about 9%, yet more than 90% of sampled stations in Connecticut and Massachusetts were rationing or dry, while Idaho, Montana, Utah, Hawaii, and Wyoming reported no shortages at all. Because price controls capped what a refiner could earn per gallon everywhere, nothing pulled fuel toward the states that were short: “Price controls kill the incentive for arbitrage.”
  • Growing towns starved by formula: In March 1974, the American Automobile Association testified to Congress that Gaithersburg, Maryland received 80% of its 1972 gasoline volume after its population had grown by 50%, urging Congress to “create a positive program whose purpose is to increase our fuel supply. The present program acts as a disincentive.”
  • Sideways rage at the pump: Drivers blamed each other. TIME reported in February 1974 that America’s 117 million cars had become “rolling reservoirs of gasoline, making the shortage worse,” as drivers topped off tanks and a Pittsburgh pump attendant spat in a customer’s face. States rolled out odd-even license-plate rationing with half-tank minimums and fines up to $1,000 in New Jersey and Maryland.
  • How it ended: On January 28, 1981, Executive Order 12287 exempted crude oil and refined products from price and allocation controls “effective immediately.”

2026-2031 U.S. Grid Interconnection Queue#

AI data centers get blamed for rising electricity rates, even though hyperscalers are signing the multi-decade contracts needed to build generation: Microsoft signed a 20-year contract to restart an 835 MW nuclear reactor at Three Mile Island, and Meta contracted for 433 MW of nuclear uprates across three Vistra plants alongside 20 years of output.

The bottleneck is getting generation built and permitted to connect:

  • The permitting queue: Berkeley Lab counts roughly 2,061 GW waiting in line for grid interconnection approval: 1,312 GW of generation and 749 GW of storage.
  • The capacity shortfall: In July 2026, grid operator PJM, which serves more than 67 million people across 13 states and Washington, D.C., came up 6,831 MW short of its reliability requirement in its 2028-29 capacity auction; only 525 MW of what cleared came from new plants and uprates.
  • Upstream turbine backlog: GE Vernova, the largest gas turbine manufacturer, is booking reservations for 2031.

Blame the Customer#

Look here only when buyers are genuinely fighting over the exact same finished product on the exact same retail shelf - and even then, notice how the fight actually ends.

2021 Ethereum GPU Shortage and Nvidia LHR#

Unlike HBM vs. DDR5, the 2021 graphics card shortage was a true fight at the retail shelf: crypto miners and gamers wanted the same GeForce RTX 30-series boxes from the same stores on the same launch days.

2020-2023 PlayStation 5 Scalpers#

After the PS5 launched in November 2020, scalpers used checkout bots to beat retail buyers to stock and flip consoles at a markup - pure zero-sum rent extraction at the shelf.

Why Big Buyers Usually Help You Later#

Except for pure resale scalpers, massive buyers who bid up a commodity in year one are usually the ones financing the factory that makes it cheap for you in year five.

  • Wright’s Law: In 1936, aeronautical engineer Theodore Wright observed that every doubling of cumulative production cuts unit cost by a steady percentage. Solar panels have followed Wright’s law for forty years, dropping about 20% in cost per doubling of installed capacity, from $106 a watt to $0.38. Retail hobbyists don’t buy enough volume to double cumulative production; hyperscalers do.
  • The 2010s U.S. Shale Boom: Even when a demand boom is a financial bubble, the physical capacity survives the crash. In the 2010s, U.S. fracking and shale drillers burned through $300 billion in negative free cash flow, wrote down $450 billion of capital, and filed more than 190 bankruptcies - peaking “without making money for the industry in aggregate.” The investors lost their money, the wells stayed in the ground, and in 2020 the United States became a net exporter of petroleum for the first time since at least 1949.

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