Sunday, October 15, 2006
Buy less means good
Have nothing much to blog about maple as there is NO UPDATES!!
Decided to keep a collection of nice spam emails from my mail box here! Check it out!
This is a rather lengthystory but if the concept is applied to the petroleum industry en masse,it just may work.
A man eats two eggs each morning for breakfast. When he goes to the grocery store he pays 60 cents a dozen. Since a dozeneggs 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, "Theprice has gone up and I have to raise my price accordingly".
This store buys 100 dozen eggs a day. He checked around for a betterprice and all the distributors have raised their prices.
The distributors have begun to buy from the huge egg farms. The smallegg farms have been driven out of business. The huge egg farms sell100,000 dozen eggs a day to distributors. With no competition, theycan set the price as they see fit. The distributors then have to raisetheir 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 eggtrucks delivering 100 dozen eggs each day. Nothing changed there. He checked 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 $1.00 a dozen.Again he asked the grocery owner why and was told, "Cakes andbaking for the holiday". The huge egg farmers know there willbe a lot of baking going on and more eggs will be used. Hence, the priceof eggs goes up. Expect the same thing at Christmas and other timeswhen family cooking, baking, etc. happen.
This pattern continues until the price of eggs is 2.00 a dozen. The man says, " There must be something we can do about the price ofeggs".
He starts talking to all the people in his town and they decide to stopbuying eggs. This didn't work because everyone needed eggs.
Finally, the man suggested only buying what you need. He ate 2 eggsa day. On the way home from work he would stop at the grocery andbuy two eggs. Everyone in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs inhis cooler. He told the distributor that he didn't need any eggs. Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told thehuge egg farms that he didn't have any room for eggs would
not need any for at least two weeks.
At the egg farm, the chickens just kept on laying eggs. To relievethe pressure, the huge egg farm told the distributor that they could buythe eggs at a lower price.
The distributor said, " I don't have the room for the %$&^*&%eggs even if they were free". The distributor told the grocerystore owner that he would lower the price of the eggs if the store wouldstart 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 youwere to drop the price of eggs back down to the original price, thecustomers would start buying by thedozen 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. Finally, the egg farmers lowered the price oftheir eggs. But only a few cents.
The customers still bought 2 or 3 eggs at a time. They said, "whenthe price of eggs gets down to where it was before, we will startbuying by the dozen."
Slowly the price of eggs started dropping. The distributors had toslash their prices to make room for the eggs coming from the egg farmers.
The egg farmers cut their prices because the distributors wouldn't buyat a higher price than they were selling eggs for. Anyway, theyhad 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 throwingaway eggs 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 pulledto 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 tankfarms. The tank farms wouldn't have room for the gas comingfrom the refining plants. And the refining plants wouldn't have roomfor the oil being off loaded from the huge tankers coming from theoil fiends.
Just $10.00 each time you buy gas. Don't fill it up. You may haveto 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, youcan 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 ofonly buying two eggs at a time but, you can't buy cheaper gas if your tankis full of the high priced stuff.
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 pricescome down..."
Decided to keep a collection of nice spam emails from my mail box here! Check it out!
This is a rather lengthystory but if the concept is applied to the petroleum industry en masse,it just may work.
A man eats two eggs each morning for breakfast. When he goes to the grocery store he pays 60 cents a dozen. Since a dozeneggs 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, "Theprice has gone up and I have to raise my price accordingly".
This store buys 100 dozen eggs a day. He checked around for a betterprice and all the distributors have raised their prices.
The distributors have begun to buy from the huge egg farms. The smallegg farms have been driven out of business. The huge egg farms sell100,000 dozen eggs a day to distributors. With no competition, theycan set the price as they see fit. The distributors then have to raisetheir 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 eggtrucks delivering 100 dozen eggs each day. Nothing changed there. He checked 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 $1.00 a dozen.Again he asked the grocery owner why and was told, "Cakes andbaking for the holiday". The huge egg farmers know there willbe a lot of baking going on and more eggs will be used. Hence, the priceof eggs goes up. Expect the same thing at Christmas and other timeswhen family cooking, baking, etc. happen.
This pattern continues until the price of eggs is 2.00 a dozen. The man says, " There must be something we can do about the price ofeggs".
He starts talking to all the people in his town and they decide to stopbuying eggs. This didn't work because everyone needed eggs.
Finally, the man suggested only buying what you need. He ate 2 eggsa day. On the way home from work he would stop at the grocery andbuy two eggs. Everyone in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs inhis cooler. He told the distributor that he didn't need any eggs. Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told thehuge egg farms that he didn't have any room for eggs would
not need any for at least two weeks.
At the egg farm, the chickens just kept on laying eggs. To relievethe pressure, the huge egg farm told the distributor that they could buythe eggs at a lower price.
The distributor said, " I don't have the room for the %$&^*&%eggs even if they were free". The distributor told the grocerystore owner that he would lower the price of the eggs if the store wouldstart 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 youwere to drop the price of eggs back down to the original price, thecustomers would start buying by thedozen 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. Finally, the egg farmers lowered the price oftheir eggs. But only a few cents.
The customers still bought 2 or 3 eggs at a time. They said, "whenthe price of eggs gets down to where it was before, we will startbuying by the dozen."
Slowly the price of eggs started dropping. The distributors had toslash their prices to make room for the eggs coming from the egg farmers.
The egg farmers cut their prices because the distributors wouldn't buyat a higher price than they were selling eggs for. Anyway, theyhad 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 throwingaway eggs 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 pulledto 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 tankfarms. The tank farms wouldn't have room for the gas comingfrom the refining plants. And the refining plants wouldn't have roomfor the oil being off loaded from the huge tankers coming from theoil fiends.
Just $10.00 each time you buy gas. Don't fill it up. You may haveto 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, youcan 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 ofonly buying two eggs at a time but, you can't buy cheaper gas if your tankis full of the high priced stuff.
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 pricescome down..."
# posted by mingz : 7:51 PM
