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# Despite the approach of winter, oil prices to industrial

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VP
Joined: 26 Apr 2004
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Despite the approach of winter, oil prices to industrial [#permalink]

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14 Jul 2004, 10:21
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Despite the approach of winter, oil prices to industrial customers are exceptionally low this year and likely to remain so. Therefore, unless the winter is especially severe, the price of natural gas to industrial 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 oil instead

(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 natural gas are not seriously affected by the weather

(E)Oil distribution is more likely to be affected by severe winter weather than is the distribution of natural gas

the answer is (B), but why not (A), a mild winter which is a not especially severe?
thanks

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Manager
Joined: 08 Jun 2004
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14 Jul 2004, 11:37
the ans here is quiote confusing but let me try....

B is certainly not the ans cos it is way out... of the scope...''long term ' forecasts perdict mild winter'' remeber ''long'' term we don't know when it is going to be now or after....

B has an unknown and hidden assumption that can be onlt got by a very CRITICAL mind and certainly mine is not as critical....

reasoning ''now when there is a severe winter the OIL prices have not Increased... so imagine that the natural gas prices have .... then what wud U do if U were a smart guy U wud immediately buy oil cos its prices have remained still and then use it for ur industrial use....so there is no point in Increasing the prices of natural gas cos the whole customer base is going to shift to OIL...now we have a VERY SEVERE winter and the OIL prices HAVE RAISED ... the natural gas prices too ahve the chance why cos the Industrial customers will now have to purchase the natural gas cos the OIL prices have Inceased ...''

Hence b'cos the natura gas users can easily have their way by sustituting the product for OIL... only when the winter gets severe which might help an increase in the price of oil that the price of natural gas has a chance to go higher...

hope that helps !

Have fun
_________________

the whole worldmakes way for the man who knows wer he's going... good luck

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Manager
Joined: 02 Jul 2004
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15 Jul 2004, 00:23

B shows that the price for gas SHOULD remain low, otherwise the industry will switch to cheap oil

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Manager
Joined: 20 Jun 2004
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15 Jul 2004, 09:20
somehow found it easy. The prices of natural gas would rise only if it has no alternative. If NG users can switch to oil, the prices of NG cannot rise.

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Senior Manager
Joined: 07 Oct 2003
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15 Jul 2004, 10:01
I too thought it was a tough one
came down to B and E

B portrays oil and gas as substitutes, hence if price of gas goes up, consumers will swich over to oil

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SVP
Joined: 16 Oct 2003
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16 Jul 2004, 12:16
I did not understand the question. Can someone please explain me what it is tryinh to ask.

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16 Jul 2004, 12:16
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