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Getting even with the oil companies

Junkman

Extra Super Moderator
I copied this from another forum for discussion here....... I don't know if it will work, but it certainly can't hurt...... What are your thoughts??????????
Getting even with the oil companies

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Read to the end. It's worth it.

This makes a lot of sense~ MAKE SURE YOU 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 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 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.

Now think about it, if we all took the time to buy gas four or five times a week with our credit cards and speed passes rather than once, we could put a big hurt on their accounting systems.

Just for fun I'm going to do it like this for the next week or two. It makes a lot more sense than that one-day boycott idea that's been showing up in my e-mail for the past two years.
 

beds

New member
I don't get it? If I buy $40 of gas a week, what does it matter if I buy it in 1 trip or 4?
 

Junkman

Extra Super Moderator
If your tank hold 20 gallons and you only buy 5 gallons at a time, then the other 15 gallons will need to be stored by the service station. That is the point that the poster was making. We are carrying the storage in our vehicles. If everyone were to buy only what they needed for the immediate future, then the stations would have a back up of inventory. This effect would trickle down to the refinery eventually. Same as what happens when everyone fills up when they think that there is going to be a shortage.... Some of the people arrive at the store only to find that there is none left. Do you understand the principle now??????? Junk.
 

beds

New member
Yeah, but it still doesn't work. They will be selling the exact same amount of gas each day. If you buy your $40 on Monday and I buy mine on Tuesday and Bob buys his on Wednesday and Brian buys his on Thursday, then that is the exact same as each of us buying $10 each day. Am I missing something?
 

daedong

New member
scenario 1- 100 autos ea has a tank capacity of 30 gal= 3000 gal if the average of these is .75 full it =2250gal stored in all autos,
[FONT=&quot]scenario 2- 100 autos ea has a tank capacity of 30 gal = 3000gal if the average of these is .25 full it =750 gal stored in all autos[/FONT]
 

DaveNay

Klaatu barada nikto
SUPER Site Supporter
daedong said:
very costly to shut down

OK.....how about "The shelf life of gasoline is a lot longer than the shelf life of an egg." ?
 

beds

New member
daedong said:
scenario 1- 100 autos ea has a tank capacity of 30 gal= 3000 gal if the average of these is .75 full it =2250gal stored in all autos,
[FONT=&quot]scenario 2- 100 autos ea has a tank capacity of 30 gal = 3000gal if the average of these is .25 full it =750 gal stored in all autos[/FONT]

Oh, I see. It's keeping your tank between 3/4 and full all the time. I guess, but it will only be effective for the first week. One-time you won't empty your tank, so that 3/4 of a tank will be stored in your car instead of a reservoir. After that it's a wash.
 

daedong

New member
DaveNay said:
OK.....how about "The shelf life of gasoline is a lot longer than the shelf life of an egg." ?
Its' still very costly to store.

[FONT=&quot]And think of the headaches the servo’s would have with more than twice as many transactions, people would be queuing to be served (now that would be a pain)
[/FONT]
 

Junkman

Extra Super Moderator
Eggs have a shelf life of about 90 - 120 days.... seems that the gasoline that I put in my small engines goes stale in about 30 - 45 days....
 

daedong

New member
[FONT=&quot]A quick search leads me to believe there Is 143,400000 give or take, Auto’s in the USA, if everyone put 5 gals less in their vehicle, That’s a hell of a lot of fuel to store

BTW i found this interesting
cars per 1000 people

United states 478

Aust 485 -------:eek: we must be a lazy bunch

http://www.nationmaster.com/red/graph-T/tra_car
[/FONT]
 

HGM

New member
Interesting idea, it would work if it was possible to get,even 1/4 of our population to act on it.. Unfortunatly no one will follow a leader here.. I might try it, but I need $20 per day so it would be a bit of a pain in the ass... Still be willing to try if it would work though..
 

Gatorboy

Active member
daedong said:

There is NO change in demand. Don't just take a snapshot of the first few days of this idea -- that's just noise on the screen. The exact OPPOSITE will happen when people abandon this idea and have to fill up again.

Actually, demand will probably rise, for now people will have to drive extra distances to visit the gas station more often. Not everyone has a station directly on their normal travel route.

This is just a spin-off of the people that say, "Don't BUY gas on Day X", this will force prices down.
 

HGM

New member
Gatorboy said:
There is NO change in demand. Don't just take a snapshot of the first few days of this idea -- that's just noise on the screen. The exact OPPOSITE will happen when people abandon this idea and have to fill up again.

Actually, demand will probably rise, for now people will have to drive extra distances to visit the gas station more often. Not everyone has a station directly on their normal travel route.

This is just a spin-off of the people that say, "Don't BUY gas on Day X", this will force prices down.


Ever wonder why distributers get discounts on buying in volume? Thats because the MFG doesnt have to pay for storage and they move more product.. This enables the MFG to get their costs reimbursed faster.. Its a win-win situation for the MFG.. Discounts are there to make them(the distributer) do what the MFG wants them to, they want them to buy it like that because it benefits them.. If they dont buy it at the discount, the discount becomes bigger(benefiting us) or available at a lesser volume

If the MFG must pay for storage longer(even 1 day at the volume typicaly sold) it builds up and costs them more overall.. Plus, you add the flexability of you being able to have somewhere to put the gas you find cheaper tomorrow(it usually works that way) since you have 1/2 tank all the time..

Once you think about it an read the egg analogy pretty thoroughly, it makes more sence..
 

XeVfTEUtaAqJHTqq

Master of Distraction
Staff member
SUPER Site Supporter
Of course, the importer, refiner, manufacturer, deliverer(?), and seller are often all part of the same mega-conglomerate.

Most local sellers have their prices set by the oil companies and have little say in what they get to buy or sell their product for.

For the smaller gas station they often have to try and make their profit from other goods and services and use Gas as the draw to bring customers in.

Of course there will be exceptions to this.
 

DaveNay

Klaatu barada nikto
SUPER Site Supporter
HGM said:
Plus, you add the flexability of you being able to have somewhere to put the gas you find cheaper tomorrow(it usually works that way) since you have 1/2 tank all the time..
Warning.....technical nitpicking below.

I you constantly have between 1/2 and a full tank, you will actually consume slightly more fuel because of hauling around a higher average weight. Plus, accellerating, starting and idling are the worst conditions for fuel economy, so as you pull into and out of the gas station and start your car a couple more times per week, you use a slight bit more fuel.

If there were any method at all that could make an impact on fuel consumption, it would be for everyone to slow down from 85-90 mph to 55-60 for a month. Try it yourself, and you will be amazed how much your mileage goes up.

While each vehicle reaches its optimal fuel economy at a different speed (or range of speeds), gas mileage usually decreases rapidly at speeds above 60 mph.

As a rule of thumb, you can assume that each 5 mph you drive over 60 mph is like paying an additional $0.20 per gallon for gas.

http://www.fueleconomy.gov/feg/driveHabits.shtml
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
DaveNay said:
If there were any method at all that could make an impact on fuel consumption, it would be for everyone to slow down from 85-90 mph to 55-60 for a month. Try it yourself, and you will be amazed how much your mileage goes up.
Or properly inflate your tires, fuel economy can increase by 5% or more if your tires are under inflated and you get them up to the proper pressure.

Or haul around less crap in your trunk, anything you can reasonably do to lower your vehicle weight will increase your fuel economy slightly.

Or put your tailgate back on your Pick-Up truck and leave it up, removing it actually reduces your gas mileage.

Jackrabbit starts from a stop comsume massive amounts of fuel relative to normal driving.
 

Doc

Bottoms Up
Staff member
GOLD Site Supporter
B_Skurka said:
Or put your tailgate back on your Pick-Up truck and leave it up, removing it actually reduces your gas mileage.

I saw that on myth busters. They used a wind tunnel to shows why the tail gate up save fuel. The tailgate creates a updraft which help keep oncoming air higher so that is passes over top of the pressured air pocket created by the tailgate. If the tailgate is down the downward pressure of air coming over the cab reduces milage.

It's unfortunate but most solutions are to much of an inconvenience, so that people do not change their habits.

I see no point in boycotting all other items sold by the place you buy gas. It is not their fault gas prices have went up. In fact your probably buying gas where you do because they are more reasonable than the station down the street. Why not support them and buy coffee, cola, snacks or whatever you want from them?

A lot of people are spending way to much time thinking of ways to impact the price of gas by not buying on certain days, buying little bits at at time, or not buying from Exxon (the biggest oil company); but the reality is the only way to do that is to use less. To change our lifestyle to use a lot less gas is impossible for me. Impossible is probably a bit to strong, but it is not something I'm willing to do at this point. So I'll pay the higher prices and try not to complain to much about it.
 

Gatorboy

Active member
I think many of you think that the gas stations would have the same number of customers per day buying less gas -- not so -- there would be long lines of customers trying to get their $10 worth, and the underground tanks would be emptying just like normal.

Hey, I've got some swampland I can sell you at a great price!
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Gatorboy said:
I think many of you think that the gas stations would have the same number of customers per day buying less gas -- not so -- there would be long lines of customers trying to get their $10 worth, and the underground tanks would be emptying just like normal.
Exactly!

There are little things that people can do (if they so choose) to slightly improve their current gas mileage. But all the other stuffed discussed is bunk; it will not affect anything long term relative to prices. However the scheme presented here will waste a lot of your time as you will have to refill far more often, but it will not affect the price. OVERALL supply does not change. OVERALL demand does not change.
 

Dutch-NJ

New member
Seems like the oil companies already have "How to make a profit" figured out.

But less fuel at a time, use less fuel, don't buy eggs from them, do anything we want............ They can just raise the price so they still make their gazillion dollar profit.
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Dutch-NJ said:
They can just raise the price so they still make their gazillion dollar profit.
Just curious, but who is "they" that you are referring to?

I don't see the profit margins of the major oil companies going up on the price they charge for refined fuels. If the major oil companies make 5% on a gallon of oil and the cost of the gallon goes up, they still make 5%. That may translate into more PENNIES of profit per gallon, but the % is the same.

In the grand scheme of investing, there are many places to invest that offer greater returns that oil company stocks.
 

DaveNay

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SUPER Site Supporter
B_Skurka said:
That may translate into more PENNIES of profit per gallon, but the % is the same.

Hey Bob....I'll trade your the percentage interest on my savings account every month for the percentage interest on your savings account. :thumb:
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Dave . . . That would work well for me, I don't keep much in a savings account so I'd probably win if you have any money tucked into a passbook.


But the point of my prior post should not be lost. The oil companies are not raising the price of oil. The producing nations are. The limited supply and the apparently nearly unlimited demand is forcing companies and nations to bid for oil. I don't see Exxon, Royal Dutch Shell or BP as the culprits here as they really don't control the cost of what they buy, and they are not raising their prices and doing the gouging, at least not in any way that can be demonstrated to me (or even to congress).
 

Dutch-NJ

New member
B_Skurka said:
Just curious, but who is "they" that you are referring to?
Whomever the "they" is that anyone thinks is making the big fat profits.

1) OPEC?
2) Exxon/Mobil?
3) Futures traders?
4) Stockholders?
5) 401k participants?
6) The Russian Mob?
7) The Skull & Bones fraternity?
8) Aliens from outter space?
9) George Bush?
10) ............................ Name your own
 

beds

New member
B_Skurka said:
But the point of my prior post should not be lost. The oil companies are not raising the price of oil. The producing nations are. The limited supply and the apparently nearly unlimited demand is forcing companies and nations to bid for oil. I don't see Exxon, Royal Dutch Shell or BP as the culprits here as they really don't control the cost of what they buy, and they are not raising their prices and doing the gouging, at least not in any way that can be demonstrated to me (or even to congress).

Sure, but where did the 5% per gallon profit come from? I would assume that the 5% markup came from a business model in the pre-$30-per-barrel days.

I was in retail and decided what the markup on an item was based on how much it cost me as well as what competitors were selling the item for. Let's say 20% markup as an average. I can afford to do business at that profit level and make a living.

Now let's say the item that I source for $.80 and sell for $1 is now only available for $1.60. There is some magical fixed demand for this item, so I will sell the same quantity. With the same markup, I'd be selling the item at $2.00 and making $.40 or double my profit. I'd be begging my supplier to increase the price as much as they could! Of course, my business model states that I only need to sell the $1.60 item for $1.80, but hey, let's make some sweet profit here!
 
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