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Despite the approach of winter, oil prices to indus- trial [#permalink]
08 Apr 2004, 04:15
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20. Despite the approach of winter, oil prices to indus-
trial customers are exceptionally low this year and
likely to remain so. Therefore, unless the winter is
especially severe, the price of natural gas to indus-
trial customers is also likely to remain low.
Which of the following, if true, provides the most
support for the conclusion above?
(A) Long-term weather forecasts predict a mild winter.
(B) The industrial users who consume most natural
gas can quickly and cheaply switch to using
(C) The largest sources of supply for both oil and
natural gas are in subtropical regions unlikely
to be affected by winter weather.
(D) The fuel requirements of industrial users of nat-
ural gas are not seriously affected by the
(E) Oil distribution is more likely to be affected by
severe winter weather than is the distribution
of natural gas.
Oil prices are low even during winter. This can happen if customers can switch from oil to gas or there is sufficient supply of oil. Since the prediction that severe winter will not affect the prices of gas then either customers must be switching to oil from gas or the gas supply is not affected.
The problem with E is that if oil supply is affected by severe winter then there is atleast one possibility of customers selecting gas and driving up the demand. E says severe weather affects oil more than gas. So gas prices will always remain low then irrespective of weather.
Whereas if B is true then customers can balance between gas and oil depending on the prices. Hence suppliers of gar dont want to increase prices.