View Full Version : Law of Supply & Demand

04-28-2006, 07:07 PM
I like this! While I'd like to take credit for this, I didn't write it (dang it!) It also makes a lot more sense than the normal "Everyone boycott such and such gas company/station for a day" garbage spewing from emails every day...

Something to ponder. The Law of Supply and Demand

This makes a lot of sense~ read to the end!!!

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, 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 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..

04-28-2006, 07:49 PM

04-28-2006, 07:57 PM
Here's where reality sets in................. :smirk:

They can't stop the production of eggs from chickens but they can cut the production of oil. People can do with out eggs but it seems they cannot do without gas, bad metaphor. What they don't make today is always in reserve for tomorrow. If people think that boycotting gas is going to make some sort of difference, they're sadly mistaken. The people controling the prices are so filthy rich they could sit on their oil wells for years and it would really make them no difference. Only people that it would affect are employees. The only way you're really going to cut gas prices is kill the owners and their families and take their ****. Since that aint gonne happen just take it up the *** and smile while you're at it like a good little consumer. Gas prices here still aren't as high as they were in Europe 40-50 years ago. Be an American, just stand in line, bend over and take it and don't forget to say, "Have a nice day" - :) <-----Don't forget your smiley face

04-28-2006, 08:04 PM
Hmmm....I like the post Viking, but I have a thought.

If they man ate 2 eggs each morning...and did it consistantly, wouldn't he have to go to the store each morning to get his eggs?

The 2 eggs are going to last him all week at 2 eggs a morning.

Hense you would still sell the same amount of eggs just at a more evenly distributed pace.

Now on to the gas,

It would be the same principle, buy 10 dollars in gas and you need to fill up just that many more times. And I doubt (although I don't have any facts) that the short period of time the amount of gas selling would drop (before evening out) would affect the prices that much. In a global economy I wouldn't think events could change that quickly.

Let me restate that, For the first few days of everyone buying $10 in gas the amounts of stored gas would build up, but the people would have to go back more often and I don't think the time frame would be big enough to affect the price.

Now, I think the issue is actually USING less rather than buying less at a time. If we all carpooled more, biked, walked, or just generally speaking burned gas more intellegently I think that would give the message that the high prices aren't going to produce bigger profits.

Of course that begs the question, If we can actually carpool/bike/whatever more at a high gas price why not do it when the prices are lower as well. It would still be the more intellegent road to travel (no pun intended :P )

But that delves into human nature and our desire to feel unique by being individual (driving our own car, being our own person, making our own choices, for better or worse) and that isn't something I'm very knowledgable in so I won't go any farther.

My $.02


04-28-2006, 09:32 PM
if the man has to go to the store every morning to buy only 2 eggs...he's wasting gas and could have afforded the dozen...instead of putting it in his tank.
Now...the generation surrounding this forum is an average of what....15/16? How many are with permits/licenses, how many with cars? They'll spend hundreds/thousands of dollars buying a new, cooler, faster intake, chopping it low, 50000000000watt stereo, fatty tires and flashy rims...but whine when gas is $3 a gallon...when all they want to do is ride around town and look cool. Stay home. Get a job and park the freaking car.
You know...30 years ago we had a whopping 13 chanels on TV. We played chess, Black-Jack, checkers, chinese checkers, Parchisi, Old Maid, 52 pick-up and played musical instruments. We had family picnics and went to the park. We camped, hunted and fished and there were sit-down dinners at the TABLE every night. Your phone was connected to the wall and you spun the dial to get the number out and if you were lucky, you got to be the one to untangle the knot from the cord. Text messaging required the use of a stamp.

The problem isn't the price of gas...the problem is that no one has rest in their ass anymore.

04-29-2006, 07:22 AM
I don't complain about gas prices... $40 every 1-1.5 weeks isn't all that bad... But I get 30+mpg in my Jetta... It'd be different with an SUV or something, but it's nothing for me...

By the way? I hate SUV's.... They're totally pointless, and are the SOLE cause of our dependence on Middle Eastern oil.... Interesting statistic: If every car in America got just 3 miles to the gallon more, we'd nearly ELIMINATE our USE of Middle Eastern oil.... I'm all for lowering speed limits on all highways, as that would help a ridiculous amount.... But... Yeah...

04-29-2006, 07:57 AM
buy a moped or motorcycle and get your 60-80- 100mpg ~most mopeds get 100miles to the gallon.

04-29-2006, 08:02 AM
any one notice that the oil companies are starting to post first quarter profits? one of the companies, i think it was the ammaco parent posted a 8.9 BILLION dollar QUARTLY profit. as in three months

04-29-2006, 08:02 AM
...and mopeds never break down... They're just temporarily a bicycle :)

04-29-2006, 08:14 AM
Thats a good idea but it won't work Vike. I was watching something on one of the news channels and they had some guy talking about this. He said if we just boycotted a gas station for one day or even an entire company for one day it wouldn't be enough to hurt them for 2 reasons. 1, the day before the boycott everyone will rush out to these gas stations and fill up, kind of defeats the purpose if their sales increase the day before. 2 the day after the people who didn't fill up the day before will fill up. So they really aren't going to lose much money. The guy suggest that we pick a particular gas company IE Exxon, BP, Ammaco, whoever and boycott them until gas prices go down. There are a couple problems with this too. First getting everyone in the United States to participate. Second so many of these big companies have bought out smaller companies its hard to know who supplies who with gas. Also he says that the boycott will probably last a minimum of a month. I agree we need to do something but what I'm not sure.

04-29-2006, 12:03 PM
I don't complain about gas prices... $40 every 1-1.5 weeks isn't all that bad... But I get 30+mpg in my Jetta... It'd be different with an SUV or something, but it's nothing for me...

By the way? I hate SUV's.... They're totally pointless, and are the SOLE cause of our dependence on Middle Eastern oil.... Interesting statistic: If every car in America got just 3 miles to the gallon more, we'd nearly ELIMINATE our USE of Middle Eastern oil.... I'm all for lowering speed limits on all highways, as that would help a ridiculous amount.... But... Yeah...

Well, SUV's only a 4WD version of a van. I have a family of 5. A VW Jetta, Celica and even a Malibu is out of the question for families like mine. I'm 6'0" / 250 lbs, wife's short but...uh... ---- Oldest daughter's 5'10" / 150 and the two little ones are always growing.
Besides, SUV's were not really designed for every day use. Originally created by companies like Land Rover, they were for the out-backers, the hunter's, the campers and the safari trekkers...weekend excursionists bought Jeeps and then created trails to conquer.
Why are there so many SUV's on the road? Well, consider the vehicle alone. Aside from tipping because of a 'higher center of Gravity"...SUV crashes give the operator/passangers a fighting chance at survival. The Government wants lighter, gas efficient cars and the public wants a faster, yet efficient vehicle. Take a hard, long look at some car wrecks in your area when they happen. they peel apart like a banana because they took the steel out of them.

04-29-2006, 02:27 PM
"you may have to stop twice a week"

ill edit that... change twice to 4 times.

04-29-2006, 02:33 PM
Hey, I just found this interesting. I didn't write it! Fact of the matter is, gas prices DO bother me. Most of you are just now starting to drive, and you've seen most of these prices since you've been actually paying attention for a bit. However, I remember paying $15.00 to fill my SUV (yes, I have one and love it.) I went the other day and paid 40.00 for gas and didn't fill it all the way. Like it or not, when gas companies make BILLIONS in profit while gas prices are going up, there is a discrepancy. If it cost so much more to make the blessed stuff, then their profit margin should be the same as when gas was cheaper.

This reminds me of when my oldest was born, a company who specialized in products for babies was making a run on a monopoly. They were raising prices just as fast as the gas is going up. You know what? The government had NO problems shutting that down in a hurry. The news broke and two months later, no more monopoly. Now, it's been 4 years since the gas prices started going up (actually, longer, since Gore tapped into the surplus several years ago to curb the rising prices at the time.) And the government is just now talking about investigating...

04-29-2006, 02:35 PM
gas prices are rediculous. it was still 1.** less than 5 years ago

04-29-2006, 05:12 PM
i dont see how this works at all, someone want to explain...

04-29-2006, 06:41 PM
no because it was a bad analogy. Eggs spoil in a week. Gasoline/oil spoils in a year...egg suppliers feel the pinch immediately and the refineries can stockpile...then send the crappy, STALE gas FIRST to 'punsh' the drivers for their earlier behavior

Recon by Fire
04-30-2006, 12:01 AM
Interesting but I won't hold my breath on it....don't forget to add in the town next door who just started buying more and more eggs from the distributor and the evil egg distributors themselves who reported records earnings while egg prices soared.

The analogy just doesn't work because in today's society you can get by without eating any eggs, consumption of oil products is a bit more dificult to avoid. But I like the story anyway :)

04-30-2006, 05:47 AM
here are a few reasons that wont work: