Is violence tied to illicit drug shortages or gluts?

Cincinnati is trying to figure out why their homicide rate is up this year.

Police say cutting the supply of illegal drugs may be the cause locally.
The national cocaine supply out of Latin America is dwindling due to tighter border control and stricter laws, police say.
“Our intelligence says there is quite a shortage on crack cocaine right now, and that has the buyers frantic to buy based on their addiction and the sellers know their livelihood is threatened based on supply and demand,” said Lt. Col. James Whalen, Cincinnati’s patrol bureau commander. “When you get involved with buying and selling drugs, unfortunately you run into violence.”

I’m not so sure how much I buy the shortage argument. I think the supply is reduced somewhat (although that’s probably more a result of the tanking of the dollar than laws and border controls, and I suppose there could be some localized pockets that are experiencing a shortage.
If that’s so, then I’m betting it’s not the shortage of one drug per se, but rather the change of status quo in the black market that’s causing a re-organization (which, unlike shifting markets for Pepsi and Coca-Cola, are resolved through guns rather than lawyers and TV ads).
Lt. Col. Whalen is at least right in noting that supply and demand are a factor in drug war violence (and a pleasant surprise it is to hear that). He’s on the right track, but the analysis is incomplete.
Of course, some people are not too happy with Whalen’s notion.

“The way it usually works is the more dope on the street, the more fellas on the street, the more competition for corners on the street, the more gun violence,” said Michael Levine, a former 25-year DEA agent and a police expert on drugs, currently located in High Falls, N.Y.
“So what are we supposed to believe, that we should import crack to Cincinnati to stop violence? We’ll have the Red Cross do a peace mission of crack cocaine drops,” he said.

Funny. But no, Michael. What you do is to legalize and regulate the drug trade to get it out of the hands of the black market’s business model.
But Michael is also right. If there is a glut of drugs on the market, then you have too many people selling them, and there are fights over territory.
Basically, drug war violence can come from any imbalance in the supply and demand chain (or even in a balanced market, from a power play attempt to control the market).
In my neighborhood was a chicken restaurant called “Atlanta’s Wings and a Prayer.” It was open for a very short time and then recently closed. Why? Maybe it was the economy. Maybe people preferred Popeye’s Chicken. Maybe people didn’t like going to that location to get chicken. Maybe their chicken wasn’t that good. But there’s a shift in the market.
Stores open, stores close. Starbucks takes over the world, and then scales back, and Mom and Pop coffee shops open near Starbucks to take advantage of the new interest in quality coffee. Pepsi and Coke shift their emphasis to bottled water while continuing their war against each other.
Sure, people are hurt in the legal market. Business owners lose their fortunes. Some people have to drive further to get chicken. But there are generally no shoot-outs over territory. You don’t have the manager of Starbucks bustin’ a cap at the barista of the Coffee House Bakery over the Cinnamon Dolce Latte market (which is, quite frankly, a lot like crack).
In a legal market, shifts are constantly happening, and some people succeed while others fail, and the lawyers haggle over the complex issues. But it’s largely done without violence.
In the black market, however, violence is the way disputes are handled, regardless of whether there is a shortage or a glut.
The only way to stop that is through legalization and regulation.