BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

Oil-supply disruption

This topic has expert replies
Post new topic Post Reply
Previous Topic Next Topic
Master | Next Rank: 500 Posts
Posts: 193
Joined: Wed Dec 05, 2012 6:53 am
Thanked: 4 times
Followed by:5 members

Oil-supply disruption

by amysky_0205 » Sat Dec 08, 2012 12:44 am
If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?

(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

OA: B

I'm able to narrowed down the answers to A, B and C, but i chose B instead.

can someone explain??? tks a LOT!
Top
Source: — Critical Reasoning |
Master | Next Rank: 500 Posts
Posts: 193
Joined: Wed Dec 05, 2012 6:53 am
Thanked: 4 times
Followed by:5 members

by amysky_0205 » Tue Dec 18, 2012 1:21 am
ANYONE helps me with this one maybe?

plzzzz
Top
User avatar
Senior | Next Rank: 100 Posts
Posts: 72
Joined: Sat May 19, 2012 2:27 pm
Thanked: 2 times
Followed by:1 members

by Sapana » Sat Dec 22, 2012 8:45 pm
What is the source of this question?? I narrowed down to B and C, but chose C instead because the last sentence in the passage mentions that whether or not the open-market nation imports oil from that country, the price of oil changes drastically. So how importing more oil solves the problem of a country which do not import at all??
Top
User avatar
Senior | Next Rank: 100 Posts
Posts: 72
Joined: Sat May 19, 2012 2:27 pm
Thanked: 2 times
Followed by:1 members

by Sapana » Sat Dec 22, 2012 8:53 pm
https://gmatclub.com/forum/cr-oil-supply ... 76272.html

This discussion might help.
Top

GMAT/MBA Expert

User avatar
GMAT Instructor
Posts: 3380
Joined: Mon Mar 03, 2008 1:20 am
Thanked: 2256 times
Followed by:1535 members
GMAT Score:800

by lunarpower » Sat Dec 22, 2012 9:49 pm
you may want to double-check your source, because the only answer choice that makes sense here is (d).

check out the boldface part:
amysky_0205 wrote:If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well,
whether such countries import all or none of their oil
.

according to the bold part, the quantity of oil imported (or not imported) into the country makes no difference. therefore, any choice that elaborates on the idea of importing (or not importing) oil won't do anything.

in fact, the argument basically guarantees that domestic oil prices in these countries WILL rise -- and that producing more oil domestically won't make a difference (since, again, the whole idea of imports vs. non-imports doesn't make a difference).
if that's the case, then the only remaining way to decrease the impact of such a price increase is simply not to use as much oil, in order to decrease the economy's dependence on oil in general (whether that oil is imported or not).
that's (d).
Ron has been teaching various standardized tests for 20 years.

--

Pueden hacerle preguntas a Ron en castellano
Potete chiedere domande a Ron in italiano
On peut poser des questions à Ron en français
Voit esittää kysymyksiä Ron:lle myös suomeksi

--

Quand on se sent bien dans un vêtement, tout peut arriver. Un bon vêtement, c'est un passeport pour le bonheur.

Yves Saint-Laurent

--

Learn more about ron
Top
Master | Next Rank: 500 Posts
Posts: 122
Joined: Tue May 01, 2012 6:05 am
Thanked: 3 times

by ihatemaths » Sat Dec 22, 2012 11:01 pm
D should be tha answer.
A-even if supply is constant , the oil prices are bound to increase due to fluctuations
B-is wrong
C as well
E-does't make sense
Top
Master | Next Rank: 500 Posts
Posts: 193
Joined: Wed Dec 05, 2012 6:53 am
Thanked: 4 times
Followed by:5 members

by amysky_0205 » Sun Dec 23, 2012 12:05 am
Sapana wrote:What is the source of this question?? I narrowed down to B and C, but chose C instead because the last sentence in the passage mentions that whether or not the open-market nation imports oil from that country, the price of oil changes drastically. So how importing more oil solves the problem of a country which do not import at all??
This question is from OG.
Top
Senior | Next Rank: 100 Posts
Posts: 39
Joined: Tue Nov 06, 2012 4:15 am
Thanked: 1 times

by viveksingh222 » Sun Dec 23, 2012 9:37 am
Inclined towards D as none of the solutions provide a required long term solution.

Regards,
Vivek
Top
User avatar
Junior | Next Rank: 30 Posts
Posts: 20
Joined: Sun Jun 06, 2010 2:12 pm
Thanked: 2 times
Followed by:2 members

by dentobizz » Sun Dec 23, 2012 6:40 pm
As per OG OA is D

If there is an oilsupply disruption resulting in higher international oil pricesdomestic oil prices in open-market countries such as the United States will rise as wellwhether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is truewhich of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

Evaluation of a Plan
Situation International oil prices rise when a disruption in the oil supply occursin this event
open-market countries experience a rise in domestic oil priceseven if they do not import any oil

Reasoning What policy will reduce the economic impact of oil price increases? All open-market countries experience a rise in oil priceseven when they do not import oil. Thus importing oil is not the issue A nation can soften the impact of price hikes by using less oil because decreasing oil consumption would decrease the need to purchase oil at increased pricesconservation is a way to lower consumption

A] Not all countries import oilfor those that do, maintaining the level of oil imports when prices fluctuate would affect the economy
B] The number of oil tankers is irrelevant to the effect on the economy
C] The diplomatic relationship among countries is irrelevant to the effect on the economy
D ]Correct. This statement properly identifies a factor that will reduce the economic impact of increases in oil prices
E Decreasing domestic oil production would only make the situation worse."

Please correct the OA
Thnks
Top
Post new topic Post Reply
• Page 1 of 1