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# Economists have noted in recent weeks that the price per barrel of cru

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Math Expert
Joined: 02 Sep 2009
Posts: 50714
Economists have noted in recent weeks that the price per barrel of cru  [#permalink]

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10 Jul 2018, 00:25
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Difficulty:

15% (low)

Question Stats:

84% (01:39) correct 16% (01:43) wrong based on 63 sessions

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Economists have noted in recent weeks that the price per barrel of crude oil has decreased sharply over the last few months, dropping as much as seventy percent. They have also found, however, that the price of gasoline at the pump has not seen a similarly sharp reduction, and gasoline prices have dropped only about fifty percent.

Given the statements above, which of the following most helps to explain the difference between the drop in the price of crude oil per barrel and the drop in the price of gasoline at the pump?

A. The demand for crude oil worldwide has suddenly decreased; this has led to a drop in the price of crude oil.

B. While crude oil prices were high, refineries that processed crude oil into gasoline absorbed a large part of the cost; these refineries are now recovering some profit by not yet passing the decreased price in crude oil to customers at the pump.

C. Oil companies have recently discovered a large and previously untapped oil reserve; this discovery immediately sent crude oil prices plummeting.

D. A major wind energy company unexpectedly announced plans to provide a large-scale alternative energy option to citizens in several nations; this created a competition for crude oil that negatively affected its price.

E. Due to the increasingly low cost of crude oil, the cost of production now exceeds the return in value; this has forced some oil production companies to go out of business.

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Re: Economists have noted in recent weeks that the price per barrel of cru  [#permalink]

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10 Jul 2018, 03:58
Bunuel wrote:
Economists have noted in recent weeks that the price per barrel of crude oil has decreased sharply over the last few months, dropping as much as seventy percent. They have also found, however, that the price of gasoline at the pump has not seen a similarly sharp reduction, and gasoline prices have dropped only about fifty percent.

Given the statements above, which of the following most helps to explain the difference between the drop in the price of crude oil per barrel and the drop in the price of gasoline at the pump?

A. The demand for crude oil worldwide has suddenly decreased; this has led to a drop in the price of crude oil.

B. While crude oil prices were high, refineries that processed crude oil into gasoline absorbed a large part of the cost; these refineries are now recovering some profit by not yet passing the decreased price in crude oil to customers at the pump.

C. Oil companies have recently discovered a large and previously untapped oil reserve; this discovery immediately sent crude oil prices plummeting.

D. A major wind energy company unexpectedly announced plans to provide a large-scale alternative energy option to citizens in several nations; this created a competition for crude oil that negatively affected its price.

E. Due to the increasingly low cost of crude oil, the cost of production now exceeds the return in value; this has forced some oil production companies to go out of business.

The price per barrel of crude oil has dropped as much as 70%
while
gasoline prices have dropped only about 50%

Imo

None of the answers are even close to B.
B .
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Joined: 21 Jul 2017
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Economists have noted in recent weeks that the price per barrel of cru  [#permalink]

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Updated on: 10 Jul 2018, 08:56
A. The demand for crude oil worldwide has suddenly decreased; this has led to a drop in the price of crude oil.

<b> So the prices of crude oil fell...ok but what about the Gasoline price? - Reject <\b>

B. While crude oil prices were high, refineries that processed crude oil into gasoline absorbed a large part of the cost; these refineries are now recovering some profit by not yet passing the decreased price in crude oil to customers at the pump.

<b> Looks good. Attends the gasoline price in the question <\b>

C. Oil companies have recently discovered a large and previously untapped oil reserve; this discovery immediately sent crude oil prices plummeting.

<b> again...argh what about the gasoline price <\b>

D. A major wind energy company unexpectedly announced plans to provide a large-scale alternative energy option to citizens in several nations; this created a competition for crude oil that negatively affected its price.

<B> Out of scope <\B>

E. Due to the increasingly low cost of crude oil, the cost of production now exceeds the return in value; this has forced some oil production companies to go out of business.

<b> so it is between B and E now. B seems more appropriate <\B>

Sent from my D2502 using GMAT Club Forum mobile app

Originally posted by rever08 on 10 Jul 2018, 05:09.
Last edited by rever08 on 10 Jul 2018, 08:56, edited 1 time in total.
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Joined: 23 Jun 2015
Posts: 29
Re: Economists have noted in recent weeks that the price per barrel of cru  [#permalink]

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10 Jul 2018, 08:51
Bunuel wrote:
Economists have noted in recent weeks that the price per barrel of crude oil has decreased sharply over the last few months, dropping as much as seventy percent. They have also found, however, that the price of gasoline at the pump has not seen a similarly sharp reduction, and gasoline prices have dropped only about fifty percent.

Given the statements above, which of the following most helps to explain the difference between the drop in the price of crude oil per barrel and the drop in the price of gasoline at the pump?

A. The demand for crude oil worldwide has suddenly decreased; this has led to a drop in the price of crude oil.

B. While crude oil prices were high, refineries that processed crude oil into gasoline absorbed a large part of the cost; these refineries are now recovering some profit by not yet passing the decreased price in crude oil to customers at the pump.

C. Oil companies have recently discovered a large and previously untapped oil reserve; this discovery immediately sent crude oil prices plummeting.

D. A major wind energy company unexpectedly announced plans to provide a large-scale alternative energy option to citizens in several nations; this created a competition for crude oil that negatively affected its price.

E. Due to the increasingly low cost of crude oil, the cost of production now exceeds the return in value; this has forced some oil production companies to go out of business.

I think , only option B is explaining the relation between crude oil price and gasoline price at pump . All other options are out of scope .
Please correct me if I am wrong . Thanks in advance !!
Re: Economists have noted in recent weeks that the price per barrel of cru &nbs [#permalink] 10 Jul 2018, 08:51
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