The demand is high mostly because of hoarding and people buying up what comes in so they can resell it on the auction sites. With all the hysteria during the gun control scare, lots of people (new and old gun owners) decided that they weren't going to be caught short again and started stocking up, just in case. Then as mentioned above, all the survival groups preach about the virtues of having a large stash of 22LR. It's a snowball going downhill effect, the 22LRs started out cheap and as the shelf stock dwindled and people started making money on reselling, the new higher prices have become accepted as somewhat normal, so people are buying, even now. I've seen some outrageous bids being made on CCI Mini Mags, not asking prices, but bids!
Even our little rural Wal Mart has now got an "ammo buying line" set up each morning and they limit each buyer to 3 boxes of ammo. The same crowd shows up every morning about 5 AM just to secure their place in line to see if any ammo got shipped in the night before. There's a small gun shop just across the street from the Wal Mart and they've got just about any kind of ammo you want, if you feel like paying their price, and 90% of it came from the guys lining up at Wal Mart in the mornings.
I talked to a salesman from Federal and he swore that they were shoving their 22LRs out the door as fast as they could make them, that the government's purchases weren't having any effect on availability and that the only reason they could find was hoarding.
There must be a lot of people out there with some absolutely huge amounts of 22!