A man eats two eggs each morning for breakfast. When he goes to thegrocery store he pays 60 cents a dozen.Since a dozen eggs won't last a weekhe normally buys two dozens at a time. One day while buying eggs he noticesthat the price has risen to 72 cents. The next time he buys groceries, eggsare 76 cents a dozen.
When asked to explain the price of eggs the store owner says, "The price hasgone up and I have to raise my price accordingly". This store buys 100 dozeneggs a day. He checked around for a better price and all the distributorshave raised their prices. The distributors have begun to buy from the hugeegg farms. The small egg farms have been driven out of business. The hugeegg farms sell 100,000 dozen eggs a day to distributors. With nocompetition, they can set the price as they see fit. The distributors thenhave 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 eggtrucks delivering 100 dozen eggs each day. Nothing changed there. Hechecked out the huge egg farms and found they were selling 100,000 dozeneggs to the distributors daily. Nothing had changed but the price of eggs.
Then week before Thanksgiving the price of eggs shot up to $1.00 a dozen.Again he asked the grocery owner why and was told, "Cakes and baking forthe holiday". The huge egg farmers know there will be a lot of baking goingon and more eggs will be used. Hence, the price of eggs goes up. Expect thesame thing at Christmas and other times when family cooking, baking, etc.happen.
This pattern continues until the price of eggs is 2.00 a dozen. The mansays, " There must be something we can do about the price of eggs".He starts talking to all the people in his town and they decide to stopbuying eggs. This didn't work because everyone needed eggs.Finally, the man suggested only buying what you need. He ate 2 eggs a day.On the way home from work he would stop at the grocery and buy two eggs.Everyone in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs in hiscooler. He told the distributor that he didn't need any eggs. Maybewouldn't need any all week.The distributor had eggs piling up at his warehouse. He told the huge eggfarms that he didn't have any room for eggs would not need any for at leasttwo weeks.At the egg farm, the chickens just kept on laying eggs. To relieve thepressure, the huge egg farm told the distributor that they could buy theeggs at a lower price.
The distributor said, " I don't have the room for the %$&^*&% eggs even ifthey were free". T he distributor told the grocery store owner that hewould 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. Thecustomers are only buying 2 or 3 eggs at a time. Now if you were to dropthe price of eggs back down to the original price, the customers would startbuying by the dozen again".The distributors sent that proposal to the huge egg farmers but the eggfarmers liked the price they were getting for their eggs but, those chickensjust kept on laying. Fin ally, the egg farmers lowered the price of theireggs.
But only a few cents
The customers still bought 2 or 3 eggs at a time. They said, "when the priceof eggs gets down to where it was before, we will start buying by thedozen."Slowly the price of eggs started dropping. The distributors had to slashtheir 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 ahigher price than they were selling eggs for. Anyway, they had fullwarehouses 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 awayeggs they couldn't sell.The distributors started buying again because the eggs were priced to wherethe 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 tothe pump? The dealer's tanks would stay semi full all the time. Thedealers wouldn't have room for the gas coming from the huge tank farms. Thetank 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 fromthe huge tankers coming from the oil fiends.Just $10.00 each time you buy gas. Don't fill it up. You may have to stopfor 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 alittle under quarter full. The way prices are jumping around, you can buygas for $2.65 a gallon and then the next morning it can be $2.15. If youhave 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 timebut, you can't buy cheaper gas if your tank is full of the high pricedstuff.
Also, don't buy anything else at the gas station; don't give them any moreof your hard earned money than what you spend on gas, until the prices comedown..."just think of this concept for a while.
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