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# If there is an oil-supply disruption resulting in higher

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Re: CR - Oil-Supply Disruption [#permalink]

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06 Mar 2009, 21:18
OA-C indeed
GMAT TIGER wrote:
nitya34 wrote:
Now try the related Next Q
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.

59. Which of the following conclusions is best supported by the statement above?
(A) Domestic producers of oil in open-market countries are excluded from the international oil market when there is a disruption in the international oil supply
(B) International oil-supply disruptions have littleif any, effect on the price of domestic oil as long as an open-market country has domestic supplies capable of meeting domestic demand
(C) The oil market in an open-market country is actually part of the international oil marketeven if most of that country's domestic oil is usually sold to consumers within its borders
(D) Open-market countries that export little or none of their oil can maintain stable domestic oil prices even when international oil prices rise sharply
(E) If international oil prices risedomestic distributors of oil in open-market countries will begin to import more oil than they export

(C) The oil market in an open-market country is actually part of the international oil market, even if most of that country's domestic oil is usually sold to consumers within its borders

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Re: CR - Oil-Supply Disruption [#permalink]

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08 Mar 2009, 11:29
Hi mates

what's the OA then?

First, nitya34 says this is a question for OG and the OA is D but then it's also said that the OA is C

This is a little bit confusing

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Re: CR - Oil-Supply Disruption [#permalink]

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08 Mar 2009, 19:39
I think Nity said istake that his ans is OA.
OA is D as posted by original poster
JohnLewis1980 wrote:
Hi mates

what's the OA then?

First, nitya34 says this is a question for OG and the OA is D but then it's also said that the OA is C

This is a little bit confusing

Cheers
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Re: CR - Oil-Supply Disruption [#permalink]

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08 Mar 2009, 22:40
OA of 58-D
OA of 59-C

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.

59. Which of the following conclusions is best supported by the statement above?
(A) Domestic producers of oil in open-market countries are excluded from the international oil market when there is a disruption in the international oil supply
(B) International oil-supply disruptions have littleif any, effect on the price of domestic oil as long as an open-market country has domestic supplies capable of meeting domestic demand
(C) The oil market in an open-market country is actually part of the international oil marketeven if most of that country's domestic oil is usually sold to consumers within its borders
(D) Open-market countries that export little or none of their oil can maintain stable domestic oil prices even when international oil prices rise sharply
(E) If international oil prices risedomestic distributors of oil in open-market countries will begin to import more oil than they export

(C) The oil market in an open-market country is actually part of the international oil market, even if most of that country's domestic oil is usually sold to consumers within its borders
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Re: CR - Oil-Supply Disruption [#permalink]

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09 Mar 2009, 03:45
As per the quesiton by Nitya,
What if the option
If international oil prices risedomestic distributors of oil in open-market countries will begin to import more oil than they export

would be

If international oil prices risedomestic distributors of oil in open-market countries will begin to export more oil than they import

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Re: CR - Oil-Supply Disruption [#permalink]

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11 Mar 2009, 07:44
aielman, imo the answer would still be C, since domestic producers would only export more if the price for oil is higher abroad than it is on the domestic market. As answer C explains, in open markets the price for a product is the same as on the international market.
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Re: CR - Oil-Supply Disruption [#permalink]

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06 Jan 2010, 20:07
D is more logical.
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Re: CR - Oil-Supply Disruption [#permalink]

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07 Jan 2010, 07:58
IMO D
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Re: CR - Oil-Supply Disruption [#permalink]

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07 Jan 2010, 11:21
D for sure. Let's stick to 1 question per post to avoid confusion.
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Re: CR - Oil-Supply Disruption [#permalink]

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19 Jan 2010, 18:54
I chose D. I think this is a CR question worth rephrasing to omit the junk and get the real question which was simply filling in, "it's in the best interest of open market nations to do X."

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Re: CR - Oil-Supply Disruption [#permalink]

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19 Jan 2010, 18:54
I chose D. I think this is a CR question worth rephrasing to omit the junk and get the real question which was simply filling in, "it's in the best interest of open market nations to do X."

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Re: CR - Oil-Supply Disruption [#permalink]

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27 Apr 2010, 03:16
I will go with 'B'. To reduce the fluctuations due to supply disruptions, it is always good to move towards backward integration.
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Re: CR - Oil-Supply Disruption [#permalink]

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24 Mar 2012, 14:27
I have chosen D for this question:

To summarize the passage - oil supply disruption causes increased international oil prices. This international oil price leads to increased domestic prices in open market economies regardless of how much is imported.

A. If we maintain the quantity of oil imported, we are not reducing the economic impact because any fluctuation in oil price will lead to much higher costs.

B. What does the amount of oil tankers have to do with anything? This seems irrelevant to me.

C. How does suspending diplomatic relations affect international and domestic oil prices? This also seems irrelevant.

D. This is the correct answer - by decreasing oil consumption, you are exposing the country to less risk in price fluctuation. Here is an extreme example:

Say the US currently consumes 2 Million barrels of oil per day and we reduce the oil consumption to 100 000 barrels of oil per day. By reducing the amount of oil consumed, the economic impact is reduced because even if the price of oil increases, the total amount spent on oil has decreased (assuming the price of oil isn't ridiculously high!)

E. This would make things worse because decreasing domestic production would lead to large amounts of imports. Therefore, the country will be hit harder if the oil price suddenly increases.

Last edited by Narenn on 07 Oct 2013, 10:01, edited 1 time in total.
All similar threads have been merged.
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If there is an oil-supply disruption resulting in higher [#permalink]

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26 Jun 2014, 00:48
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 in the passage 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
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Re: If there is an oil-supply disruption resulting in higher [#permalink]

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26 Jun 2014, 01:07
aimkp 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.
If the statement in the passage 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

Merging similar topic.

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Re: If there is an oil-supply disruption resulting in higher [#permalink]

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05 Jul 2015, 21:37
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Re: If there is an oil-supply disruption resulting in higher [#permalink]

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02 Sep 2015, 01:11
anandnk wrote:
Open market(As I understand it) : A market where the seller is free to set any price and the price is not subject to government regulations. Also anyone can sell in that market.

If there is sharp increase in the price of oil in the international
market then what happens in the different countries ?

1) Countries which import oil - They will be affected because they will now
pay higher price.

2) Countries which import no oil at all - Means they either have oil
sufficient to cater to local market and may have extra oil to export.
Here if the international prices rise then local producers might export
oil to earn bigger profits and local consumer will suffer. In fact
oil prices will rise here also because there is less oil available for
consumption.

So whether or not a country imports oil that country will suffer if the
international prices rise.

The best way to counter this problem is decrease consumption through
conservation.

If oil consummption is decreased then countries which import oil will
suffer less and also those countries which import no oil will not suffer
more.

I hope my explanation matches with OA and is acceptable.

yes, very good explanation. i appreciate.
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Re: If there is an oil-supply disruption resulting in higher [#permalink]

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07 Oct 2016, 15:07
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If there is an oil-supply disruption resulting in higher [#permalink]

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19 Dec 2016, 20:19
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 in the passage 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?

Pre-thinking-
In an open market, the domestic oil producers will try to export their in order to maximize their profits . So the government can
- Reduce the oil consumption by encouraging usage of alternative energy
- Impose sanctions/taxes against export of domestic oil - This may not be a viable option in an open market

A. Maintaining the quantity of oil imported at constant yearly levels - This will not help and domestic market will still be susceptible to fluctuations in international crude price

B. Increasing the number of oil tankers in its fleet - It does not help

C. Suspending diplomatic relations with major oil-producing nations - It does not help

D. Decreasing oil consumption through conservation - Correct - decreasing consumption or moving towards alternative energy

E. Decreasing domestic production of oil - It means the country has to import more oil if the domestic demand is at the same level

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If there is an oil-supply disruption resulting in higher   [#permalink] 19 Dec 2016, 20:19

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