Tuesday, April 11, 2006

Does this seem logical?

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 and baking happens.

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 buy 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..

In my opinion...this would be great, if it worked! Gas doesn't go bad the same way chicken's eggs would. What do you think?


Bathroom Hippo said...

The moral of the story:

Egg your local gas station.

Bathroom Hippo said...

Done and done.

Thanks for the lesson Lee Ann!

truckdriver_sefl said...

Wow that sounds like a grand plan to me I mean we have to start somewhere right??

Have a great day Lee Ann:-}

angel, jr. said...

I wonder if it would work. We should all band together and give it a try.

Edge said...

Hmmm, we have a surplus of corn we can't get rid of either. Maybe we should switch to ethanol and give those OPEC'ers a taste of their own medicine. Our farmers get rich and we don't have to rely on petroleum prices or some mad raghead in the middle-east for the price of oil.

BTW - this has gone on for years and the only way out is to stop our dependency on foreign crude. This shortage skyrocket in price happens about every 30-40 years.


Glibbidy said...

I think I'll stick with buying a dozen organic eggs each week from the farmers wife.

the 10.00 deal is a terrific idea, in theory it should work.

Saur♥Kraut said...

It sounds feasible but they know they've got us over a barrel (pun intended). They have massive storage facilities, and gas and oil don't go bad like eggs do. :P

Heather said...

And unlike the chicken that won't quit laying those eggs, oil doesn't have to be pulled from the ground at a certain rate. It's not like it's going to stop flowing just 'cause we're not buying it.

Lee Ann said...

Hippo ~ Now that is good! Thank you for the lesson Hippo! ;)

Trucker ~ Yes, we do....let's think about this!

Angel ~ I think that is the key...banding together in a cause!

Lee Ann said...

Jef ~ Yeah, and what about switchgrass?

Glib ~ Good theory, but reality??? hmmmm!

Saur ~ You are right, on both counts!

Heather ~ Unfortunately you are correct with that!

Bathroom Hippo said...

*throws eggs at your blog*

rastaman said...

You wrote it, I like it. Really. I'm only buying two eggs tomorrow, and $5.00 worth of gas. See how they like that shit!

**peace and hugs to you gurl**

ticharu said...

Walking is a good idea as well!

jiggs said...

One aspect of this analogy that doesn't carry over well is the fact that while you and I might be able to cut back on our gasoline consumption, the people that ship good to where they need to go cannot. They have to buy regardless of what the price is because if they stop consuming gas they can't ship their products and then they don't make money and then they go out of business.

So then there is an empirical question: can the consumer alone affect the price of gasoline in this way and if so, by how much?

Henri Banks said...

damn now i need my brain medication !!

Lee Ann said...

Hippo ~ :(

Rasta ~ Big hugs to you Rasta, you make Babygirl happy.

Tich ~ I agree...I just finished working out on the treadmill for 60 minutes!

Jiggsy ~ Very true! We will never know because there would be enough people to ruin the experiment. (You know the 1 or 2 bad kids in the classroom that ruin it for the whole class).

Henri ~ It is just all theoretical!

Phain said...

well...eggs give me gas...does that help the story any? ;)

Ellen said...

A good theory, yes. But I rather like hippos suggestion.

BuccoTom said...

I like the way you have thought it through Lee Ann. In theory, it makes for a good argument but take a walk down to the local car dealers or just look around at cars in your town and count how many gas guzzling SUVs there are driving off the lot or driving around town with temporary plates and gas has been going up for a while. People don't care. My problem is the reverse ... I have a vehicle that will run off ethanol but live in Bumfucked, Louisiana where it isn't for sale. Go figger! I'll give it a shot if you will. Good thinking doll. Love ya.

Lee Ann said...

lcqap ~ haha...very good!

Ellen ~ I agree!

TG ~ I know, those gas guzzlers...I think that could be another whole post!
Thanks for you input. Love ya too!

Shannon said...

LOL @ Hippo

I am late for the party.. so I will just say Hello!!

Phats said...

Umm I feel like such an idiot I got lost on like the third egg

Sidenote- I love the song playing on your blog

Neo said...

Lee Ann - Hmmmm, I was thinking gas prices through the beginning of that. Great point. Someone has to teach these greedy bastards!

Fight the man!

Peace & Hugs,

- Neo

hotboy said...

What a cunning plot?! There must be a reason why stuff like that doesn't happen. Individualism? Hotboy

Lee Ann said...

Shannon ~ Glad you stopped by! Hope the party was fun.

Phats ~ Thank you for coming to visit me at the Castle, please come back!

Neo ~ Our minds must think the same. Just an idea....they have to start somewhere, right?

Hotboy ~ Because there is too much complacency.

Anonymous said...

In my case, I drive nearly 100 miles a day. Putting only $10 in my tank at a time just means I fill up twice as many times.

What I would LOVE to see is somebody figure out a way to get more energy out of that gallon of gasoline... either an additive or injecting more oxygen into the mix, or whatever, to the point where we can double or triple our gas mileage. If someone can figure out a way to do that, the would be multi gazillionaires overnight...

Lee Ann said...

Nilo ~ I totally understand what you are saying. First I have to say I am sorry you have to drive so far everyday...that stinks! I drive about 3 miles to work!
It will happen, someone is going to find an alternative to all this, one day!

robmcj said...

Instal a 400-gallon tank under your house. Fill it at $2.15, and wait. Mind you, this might not work if everybody tries it. And I just hope your house never goes on fire.

I hope that helps.

Barry said...

BTW - Gasoline does go bad! Can't be stored very long.

Lee Ann said...

Barry ~ Well, well, then that sheds a new light on my little scenario, doesn't it! haha