Yea, yea, the new budget was announced yesterday by our dear Pak Lah, promising no more increase in petrol prices for next year...hmm my sceptic ego is not convinced - is u? I believe the Indonesians have the same problemo since they just had a 50% price hike. I feel u, bro...however there're afterall more than one way to skin a cat, so let's see if this works as it takes a leaf off Econs 101 on the supply & demand theory. It's a bit lengthy but totally logical and if we apply it en masse to the petroleum industry. Hey u've got nothing to lose...
Bob has 2 eggs each morning for breakfast. He pays 60 cents for a dozen at the grocery store. He'd buy 2 dozens at a time since a dozen eggs won't last a week. One day while buying eggs he noticed that the price has risen to 72 cents. The next time he buys groceries, eggs are 76 cents/ a dozen. All the store owner has to say is, "The price has gone up so I've to raise my price accordingly". This store buys 100 dozen eggs a day. Bob checked around for a better price and realized that all the distributors have raised their prices. The distributors have begun to buy from the huge egg farms as the small egg farms have been driven out of biz. 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.
As Bob kept buying eggs, the price kept increasing. He checked out the huge egg farms n found they were still selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs. The week b4 Thanksgiving the price of eggs shot up to $1.00 a dozen. Again he asked the grocery owner why and was told,"Cakes & baking for the holiday". The huge egg farmers know there'll be a lot of baking going on and more eggs will be used. Hence, let's capitalize! Expect the same thing at Christmas and other occasions when family cooking, baking, etc. happen. This pattern continues until the price of eggs is now $2.00 a dozen. Bob's like, "There must be something we can do about the price of eggs". He started talking to everyone in his town & they decide to stop buying eggs. This didn't work because everyone needed eggs.
Finally, Bob suggested only buying what u need. He ate 2 eggs a day. On the way home from work he would stop at the grocery & buy 2 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 more eggs for the next week. The distributor had eggs piling up at his warehouse & told the huge egg farms he wouldn't need any for at least two weeks. At the egg farm, the chickens continued laying eggs. To relieve the pressure, the huge egg farm told the distributors they could buy the eggs at a lower price.The distributor said, "I don't have room for the freakin' eggs even if they were free". The distributor told the grocery store 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. If you drop the price of eggs back to the original price, the customers might start buying by the dozen again". The distributors sent that proposal to the huge egg farmers. Eventho' the egg farmers didn't like it, they finally lowered the price as those chickens just kept on laying. But only by a few cents.
So the customers still bought 2-3 eggs at a time & said,"When the price of eggs lowers to where it was b4, we'll 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. Anyways 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.
Phew! Now, transpose this analogy to the gasoline industry. What if everyone only bought $10.00 worth of petrol 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 petrol coming from the huge tank farms. The tank farms wouldn't have room for the petrol 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 at the pump. You may have to stop for gas twice a week but the price should come down. Think about it. 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 petrol, until the prices come down!
Hey this will only work if we all pull it together as ONE, right uncle Bob?
