Thread: Price of eggs.
04-26-2006, 02:12 PM #1
Price of eggs.
I've seen email after email saying boycott exxon, boycott this, boycott that, but this email is probably the only one that could actually work. It's long but worth the read. I don't really think it'd work but it is rather interesting.
The Price of eggs
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 dozen 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 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 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..
This makes so much sense. Supply and Demand. I’ll never fill up again until the prices come down.
04-26-2006, 02:23 PM #2
without any logic behind it... I've been doing this for the past few weeks myself as well. I don't mind going to the gas station every other day for 15 bucks, but cringe at filling it up with 65 bucks in one day... so i myself usually do about 15 bucks at a time. when it gets 1/4 tank, i put in 15 bucks
04-26-2006, 02:35 PM #3
I fill her up, drive for apporx 2 weeks and some change, and fill her up again.
For me i did the math, and the difference per day for a year for gas at $2.83/gallon(reg price here) over $2.25/gallon is $0.63/day.
04-26-2006, 02:39 PM #4
So that's about $230 a year. Now do the math on gas at $4.00, that's the number the market speculators and oil companies are trying to push it to.
04-26-2006, 02:43 PM #5Originally Posted by miketrin
But I'd probably be happier if gas prices went back to when I first started to drive. I don't go around just for a drive nearly as much as I used to... now only when I'm going somewhere.
04-26-2006, 02:48 PM #6
yea I feel the same way Rocket... it sucks. I used to jump in the car with a friend or something and take a long drive at night along the ocean parkways or aimlessly just drive. I won't get in the car anymore until we have a defined destination. When you are young, you always wanted to be the one to take your car with your friends when you go out, now I hope and pray someone else will volunteer to drive before I need to take my car out.... It's getting to the point where the monthly payment on my truck is a waste of money because I don't rack up the miles on it like I used to and fully utilize it.
04-26-2006, 02:48 PM #7
Sorry but I dont see the difference. If the guy who was buying 2 dozen eggs at a time only bought 2 a day, he is still consuming just as much. If he was buying 2 dozen eggs at a time that would last him 12 days. He wasn't buying 2 dozen a week and wasting the rest.
If I put $10 of gas in my tank every other day that is the same as filling up ($30) every week.
Unless their business model was a day to day thing I can see it effecting them for a day or two but then it would normalize.
If I am consuming just as much gas as normal but spreading the payment over the course of the week I dont see how that could increase the supplies at the distributor.
If I am buying $10 today and so are other people it is the same darn thing as each of us filling up less occasionally.
Maybe I just dont get it.
04-26-2006, 02:52 PM #8
I remember a conspiracy theory a couple of years ago when gas went from $1.10 to about $2.10. The theory was that the price was over inflated and then it would go down to $1.50 and everyone would think that was cheap.
I suppose if it gets back down to $1.50 then we all will think it's cheap.
By the way, what did we really expect with 2 oil men in the top 2 spots in the country?
04-26-2006, 02:55 PM #9
Jack, if I wrote the story I'd also have the guy consume 1 less egg a day. Like it or not, when the prices goes up we do consume less.
However, they do deliver gas almost every day to the stations. It's not like they can store a weeks worth of gas in those underground tanks. At least in Kansas City I see them daily. So the story above would work in that sense as long as you live in a rather large city where they fill the station's tanks daily or every other day.
Like I said, I am not an advocate of these chain emails but out of all of the ones I've seen this was the most interesting and made the most sense.
04-26-2006, 03:00 PM #10Originally Posted by jack
I'm not sure why you called it a conspiracy theory instead of just calling it a theory but it does ease the pain when they want to raise prices.
The free market and capitalism are alive and well in the USA, but unless you make 6 figures you're going to be left behind as the division between upper class and lower class widen and the middle class vanishes.
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