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A man eats two eggs each morning for breakfast. When he goes to the
grocery store he pays 60 cents a dozen. Since a dozen eggs won't last a
week he normally buys two dozens at a time. One day while buying eggs he
notices that the price has risen to 72 cents. The next time he buys
groceries, eggs are 76 cents a dozen.
When asked to explain the price of eggs the store owner says, "The price
has gone up and I have to raise my price accordingly". This store buys 100
dozen eggs a day. He checked around for a better price and all the
distributors have raised their prices. The distributors have begun to buy
from the huge egg farms. The small egg farms have been driven out of
business. The huge egg farms sell 100,000 dozen eggs a day to
distributors. With no competition, they can set the price as they see fit.
The distributors then have to raise their prices to the grocery stores. And
on and on and on.
As the man kept buying eggs the price kept going up. He saw the big egg
trucks delivering 100 dozen eggs each day. Nothing changed there. He
checked out the huge egg farms and found they were selling 100,000 dozen
eggs to the distributors daily. Nothing had changed but the price of eggs.
Then week before Thanksgiving the price of eggs shot up to $1.00 a dozen.
Again he asked the grocery owner why and was told, "Cakes and baking for
the holiday". The huge egg farmers know there will be a lot of baking
going on and more eggs will be used. Hence, the price of eggs goes up.
Expect the same thing at Christmas and other times when family cooking,
baking, etc. happen.
This pattern continues until the price of eggs is 2.00 a dozen. The man
says, " There must be something we can do about the price of eggs".
He starts talking to all the people in his town and they decide to stop
buying eggs. This didn't work because everyone needed eggs.
Finally, the man suggested only buying what you need. He ate 2 eggs a day.
On the way home from work he would stop at the grocery and buy two eggs.
Everyone in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs in his
cooler. He told the distributor that he didn't need any eggs. Maybe
wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told the huge egg
farms that he didn't have any room for eggs would not need any for at least
two weeks.
At the egg farm, the chickens just kept on laying eggs. To relieve the
pressure, the huge egg farm told the distributor that they could buy the
eggs at a lower price.
The distributor said, " I don't have the room for the %$&^*&% eggs even if
they were free". The distributor told the grocery store owner that he
would lower the price of the eggs if the store would start buying again.
The grocery store owner said, "I don't have room for more eggs. The
customers are only buying 2 or 3 eggs at a time. Now if you were to drop
the price of eggs back down to the original price, the customers would
start buying by the dozen again".
The distributors sent that proposal to the huge egg farmers but the egg
farmers liked the price they were getting for their eggs but, those
chickens just kept on laying. Finally, the egg farmers lowered the price
of their eggs. But only a few cents.
The customers still bought 2 or 3 eggs at a time. They said, "when the
price of eggs gets down to where it was before, we will start buying by the
dozen."
Slowly the price of eggs started dropping. The distributors had to slash
their prices to make room for the eggs coming from the egg farmers.
The egg farmers cut their prices because the distributors wouldn't buy at a
higher price than they were selling eggs for. Anyway, they had full
warehouses and wouldn't need eggs for quite a while.
And those chickens kept on laying.
Eventually, the egg farmers cut their prices because they were throwing
away eggs they couldn't sell.
The distributors started buying again because the eggs were priced to where
the stores could afford to sell them at the lower price. And the customers
starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.
What if everyone only bought $10.00 worth of gas each time they pulled to
the pump? The dealer's tanks would stay semi full all the time. The
dealers wouldn't have room for the gas coming from the huge tank farms. The
tank farms wouldn't have room for the gas coming from the refining plants.
And the refining plants wouldn't have room for the oil being off loaded
from the huge tankers coming from the oil fiends.
Just $10.00 each time you buy gas. Don't fill it up. You may have to stop
for gas twice a week but, the price should come down.
Think about it.
As an added note...When I buy $10.00 worth of gas that leaves my tank a
little under quarter full. The way prices are jumping around, you can buy
gas for $2.65 a gallon and then the next morning it can be $2.15. If you
have your tank full of $2.65 gas you don't have room for the $2.15 gas.
You might not understand the economics of only buying two eggs at a time
but, you can't buy cheaper gas if your tank is full of the high priced
stuff.
Also, don't buy anything else at the gas station; don't give them any more
of your hard earned money than what you spend on gas, until the prices come
down..." |
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