An e-mail I got the other day:


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. I 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 sells 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 and 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. They liked the
price they were getting for their eggs but, them 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 them 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 dealers 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 Middle East.

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 half 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..


 

I am just amazed that someone spent so much time writing up something like this. While I tend to agree with the last paragraph, what that really boils down to is that you’re punishing the individual station for gas prices in general, which are not their fault.  But as for the whole idea of forcing gas prices down, I can’t see how buying in bits would make any difference whatsoever!! 

 

If everyone buys a smaller amount of gas tomorrow, it would make a slight difference in the demand…tomorrow.  That’s assuming that we have a huge publicity blitz, and everyone begins it on the same day–not likely.

 

If, however, you use the same amount of gas overall, you will buy the same amount of gas.  In this scenario, your usage doesn’t change.  Therefore, the only thing that will change is the number of times you stop at the station.

If you buy the same amount of gas, the effect on gas stations will only last for a few days.  Within a very short time, the demand will be exactly the same as it was before.  I can’t see any possible way that it would force any kind of price change.

 

There may be a very slight savings to the consumer, since they will be able to “bargain shop” and buy gas whenever it is “low.”  (I use that word VERY loosely)

 

On the flip side, however, we will have to spend a great deal more time stopping at service stations, and if everyone does this, think of the lines that are likely to occur at the pumps.  For our vehicles, buying $10.00 at a time, would mean about 5-6 times as many stops for gas.  That means more paperwork, more nuisance, more chance of running out of gas, and a LOT more time sitting at gas stations, not to mention that every time you stop, there is the added temptation to pick up a snack or drink…and there goes the good intentions of that last paragraph!

 

Frankly, I think someone spent an awful lot of time writing up a completely illogical idea!  There is no way to boycott a product except to go without it.  If you do not reduce your usage, you cannot force prices!

 

Unless I have an error in my logic….which is possible!

 

Just thought of something–perhaps this was written up by a convenience store owner!  More stops = more spontaneous purchases.  hmm.

 

I may give this to my kids as an exercise in critical thinking.

Advertisements

About dayuntoday

I'm a wonderer. I spend a lot of time mulling, pondering, and cogitating. This is just a place to park some of those thoughts.
This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s