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

Question

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

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.

Same passage with other question:  LINK

vishal2302 · Accepted Answer

The answer would be C
As we are looking for a conclusion.If the domestic oil market in some way is actually a part of the international market then the price of the domestic oil would be directly dependent on that of the international oil market price(independent at how the domestic production of oil is consumed). Therefore any increase in the international oil price would result in the same increase in the domestic oil price.
Let me know if you have any doubt in particular option.

KarishmaB · Answer

Argument:
If intl oil prices rise, domestic oil prices for open-market countries will rise too, whether such countries import all or none of their oil

So even if a country does not buy its oil from intl market, its price will move up with intl prices.

We need an option that is the conclusion i.e. it is supported by the argument.

(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.

No. Our argument is instead implying that domestic producers are linked to intl market.

(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.

Incorrect. Again, the argument is saying that intl oil supply has effect on domestic prices.

(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.

Correct. The argument is telling us that domestic oil market is a part of intl market and moves with it. This is the best option, though it may not be perfect. The argument talks about "even when there are no imports". This option talks about "even when there are no exports". Still, the gist is the same - that domestic market moves with intl market.

(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.

Not correct. Our argument says that domestic market moves with the intl market. So we cannot conclude that domestic markets can maintain stable domestic oil prices when international oil prices rise sharply. At best, we don't know what happens with domestic prices when the country does not export and intl prices rise. What we know is that even if the country does not import, the domestic prices move with intl prices.

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

We cannot conclude this. We do not know what domestic distributors will do.

Answer (C)

Skientist · Answer

For ‘find a conclusion’ based questions, the correct conclusion can only be supported by the facts stated in the question, not other assumptions (no matter how obvious) can be added.
Therefore-
a) The argument makes no mention of whether or not countries are excluded from the international market. Eliminate.
b) This is exactly the opposite of what the argument is saying. Be careful, because all the elements of the conclusion are mentioned in the argument which makes it attractive, but the argument actually opposes the conclusion. Eliminate
c) Correct, the argument accounts for the effect that international oil fluctations have on domestic prices, and accounts for the fact that domestic oil is sold domestically.
d) Again, this conclusion contradict what the argument is saying. Eliminate
e) This conclusion references behaviours (importing) that is not present in the argument.

What is the source for this question? I think GMAT type questions tend to conform to the ‘absolutely no assumptions allowed’ rule a bit more than this one did.

MarkSullivan · Answer

I second Brad's analysis. The other four choices are fairly easily eliminated, but (C) requires either an assumption (that there's no other reason for why the prices track each other) or outside knowledge (of how market's work – seems like it would be pretty reasonable outside knowledge for the GMAT to expect, but the GMAT really is strict about the "no outside knowledge" rule in CR).

AkshdeepS · Answer

(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) is the correct choice

RMD007 · Answer

Hello  GMATNinja ,

Though option C is the best supported, please clarify my doubt here..

Stimulus says "domestic oil prices in an open market country can rise whether such countries import all or NONE of their oil"

Now consider a country X that DOES NOT import any oil and works solely on domestic oil. Even though price fluctuations for oil take place in this country because of international oil price changes, how can the oil in country X be PART of the international oil market?

GMATNinjaTwo · Answer

Can anybody confirm the source of this question? There is a  similar question  in the 2015 Verbal Review, so I want to make sure that this one is actually an official guide question and not just  based on  an official question.

RMD007 , "even if  most  of that country’s domestic oil is  usually  sold to consumers within its borders," that still allows for the fact that the country sells  some  oil on the international market, especially when international prices soar. That would make them part of the international oil market.

In other words, if international prices were to soar while domestic prices remained the same, country X might increase exports. But if international prices were to soar and domestic prices were to increase as well, country X might not increase exports. Both of those scenarios assume that country X is part of the international market.

If country X were NOT part of the international market, soaring international prices would have no impact on the domestic market. But if country X is part of the international market, then domestic prices will rise as international prices rise; otherwise, it wouldn't make sense to sell the oil domestically.

mykrasovski · Answer

Unless I am terribly missing something, option (A) can be an answer choice, too. If domestic producers of oil are excluded from an international market, then, logically, they are not going to sell some of their oil to international clients. To compensate for the loss of revenue, domestic suppliers might increase the price of oil for domestic clients.

(C) works, but (A) is not terribly bad. Perhaps, the source of this question is classified wrongly.

(C) works, but (A) is not terribly bad. Perhaps, the source of this question is classified wrongly.

TheUltimateWinner · Answer

Hello
 VeritasKarishma   GMATNinja 
So far I know that we're not allowed to collect info from other side of the passage in ''draw the conclusion'' conclusion question. Also, we can't assume anything in this types of question. So, I am a bit confused about the highlighted part that  MarkSullivan  wrote in his comment. Is the  highlighted  part ok?

KarishmaB · Answer

Given that the other 4 options are nowhere close, I am fairly ok with (C). Higher intl oil prices will cause domestic prices of open market countries to rise too. So the argument tells us that the domestic markets of open market countries are connected to the international market. That is what option (C) says too. Since the argument says that the domestic prices will rise, it follows that all other factors notwithstanding, the prices will rise due to some connection. So it doesn't matter who they buy from and who they sell to, the prices will rise.

TheUltimateWinner · Answer

So, we can think that there is nothing like  assuming  anything or make any real world connection ( outside knowledge ) for choosing the right answer (C)  at least  here, right mam?
Thanks__

merajul · Answer

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

Which of the following conclusions is best supported by the statement above?

This is an Inference Question. We need to find out, which obvious choice can be determined from the above. First of all, we need to check out, which answer choices are having extreme choices. Accordingly B,D & E can be cancelled out immediately. Now coming to A & C -

(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.  - Logically thinking, if domestic producers are excluded from open-market countries, then oil-supply disruption will have no effect. But still price increases.

(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. -  This makes sense, why even if there is no linkage with external market, why oil price still increases.

(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.

Correct Answer is C

Anshuman0902 · Answer

expert explain option B and C ? please

nsrivastav064 · Answer

Can someone please help me understand why option E is incorrect?

Sneha2021 · Answer

Hi Experts,
 GMATNinja   VeritasKarishma   GMATNinja Two
I am struggling to understand why logic mentioned below is not correct.
Author's logic: Even if countries are not importing, why domestic prices increase? How international supply disruption impacts domestic prices? - Maybe because we export a lot so in this case we will export more than usual that leads to a supply shortage in our home country. Even though import is little or none, export leads to increase in prices.
Based on the above logic if we evaluate d 
(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.
Yes, If they export more than usual which leads to a supply shortage in our home country then prices can go high (author's logic). So if exports are none or little, domestic prices will remain stable even when international prices are high.

I have a basic question related to export. Can a country export even if supply is low in the home country? I want to understand the conditions for export and imports.

KarishmaB · Answer

Think about this - what if all markets of open market countries act in unison? What if they are one? 
So if supply decreases somewhere in the market, the prices rise and they rise for everyone. Does it matter from where the countries are buying and where they are selling? No. In that case, can we conclude (D)? No. 
Narrow your vision to the argument only. From the argument, can we conclude that if the country doesn't export it can maintain domestic prices? No.

sk747 · Answer

Hi  MarkSullivan 
Thank you for your response. Regarding the outside knowledge, will the regular understanding of workings not apply to GMAT questions? For example: H20 is water, however it is not mentioned in passage. But one of the option brings this info in, so, do we use this info or treat it out of scope?

Thank you for your revert, in advance.

brianmontanaweb · Answer

Since we're looking for a conclusion to the claim we'll want to break it down to the important information. Higher international oil prices lead to higher domestic oil prices, regardless if that country imports oil. The conclusion we'll need should address the why in the previous phrase. So it should resemble "Even though a country doesn't import oil, the oil prices increase because the country is an open market and profit is greater when exporting."

C is the only option that answers the why.

VerbalBot · Answer

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