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Saturday, July 26, 2008

out of the box thinking?

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 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  
f iling 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. 

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