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". These 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 t he 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". T he 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. Fin ally, 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..."
just think of this concept for a while.
Posted by SHAH.
