Some companies that consume large quantities of oil keep their own oil

Question

Some companies that consume large quantities of oil keep their own oil reserves for years in which average oil prices are exceptionally high. Thus, at times when oil prices are quite high, they can partially deplete their reserves, using oil that they bought earlier at lower prices, with the intention of buying oil to add back to their reserves when average oil prices are lower. Nevertheless, last year, when average oil prices were astronomically high throughout the year for geopolitical reasons, not all of these companies partially depleted their reserves.

Which of the following, if true, best explains why not all of these companies partially depleted their reserves?

A. Oil prices were also high the previous two years, so these companies expected oil prices to continue to be high.

B. Also for geopolitical reasons, many of these companies had lower-than-average demand for their services last year and required less oil for their operations.

C. Some of these companies, which have some ability to influence the opinion of other oil buyers, expected oil prices to drop in following years.

D. Although oil prices were astronomical on average, some of these companies were able to buy the oil they needed at lower, acceptable prices.

E. The practice of partially depleting reserves did occur on average, but without all companies individually partially depleting their reserves.

gmatway · Answer

Some companies that consume large quantities of oil keep their own oil reserves for years in which average oil prices are exceptionally high.
Thus, at times when oil prices are quite high, they can partially deplete their reserves, using oil that they bought earlier at lower prices,
with the intention of buying oil to add back to their reserves when average oil prices are lower.
Nevertheless, last year, when average oil prices were astronomically high throughout the year for geopolitical reasons,
not all of these companies partially depleted their reserves.

Which of the following, if true, best explains why not all of these companies partially depleted their reserves?

LET US BREAK THE QUESTION INTO MAIN POINTS

1)some companies keep aside oil reserves and wait for the oil price to rise to earn profits .
2)when price is desirably high they deplete a part of their resources
3)with the intention of buying oil to add back to their reserves when average oil prices are lower.

PRETHINKING

what if these companies realised that the prices are not going to go down immediately and it would be stupid to start depleting reserves now.
it is wise decision to wait and watch the prices to go up and hence these companies chose to not to deplete the oil reserves .

basically they want to make more profit and they should be able to add back to their reserves for which the price has to go lower in future.

A.  Oil prices were also high the previous two years, so these companies expected oil prices to continue to be high.
(companies are waiting for the prices to go up that is why they are depleting reserves slowly as less as they can, basically they want to make more profit and they should be able to add back to their reserves for which the price has to go lower in future..

B.  Also for geopolitical reasons, many of these companies had lower-than-average demand for their services last year and required less oil for their operations.
(avoid MANY as it will not apply to all the companies. in such case we don't have to focus on words that include specific group.the question as an whole should stand. )

C.  Some of these companies, which have some ability to influence the opinion of other oil buyers, expected oil prices to drop in following years.
(avoid SOME as it will not apply to all the companies)

(avoid SOME as it will not apply to all the companies)

D.  Although oil prices were astronomical on average, some of these companies were able to buy the oil they needed at lower, acceptable prices.
(avoid SOME as it will not apply to all the companies) 
(avoid SOME as it will not apply to all the companies)

E.  The practice of partially depleting reserves did occur on average, but without all companies individually partially depleting their reserves.
(the passage already mentioned not all the companies so this point is trying to prove the result by cutting whats already mentioned ) 
(the passage already mentioned not all the companies so this point is trying to prove the result by cutting whats already mentioned )

pzgupta · Answer

Breaking down the question into own simple story

--> Companies buy oil at low prices to be sold back when prices are high
--> BUT last year even though prices were high, not all companies depleted their oil

A. If companies expected the oil prices to follow the current trend of high prices, that could be reason to not sell all reserves this year - Keeping this for now and reviewing other choices
B.  This statement actually increases the confusion of why the companies would not want to sell the oil when they needed lesser for their own purposes - INCORRECT 
C.  If they expected oil prices to drop, it would be a good time to sell their current reserves. This doesn't explain the no selling. - INCORRECT 
D.  IRRELEVANT since what low prices they were able to buy the oil at doesn't explain why they did not sell when price is high 
E.  This also does not explain why, just tells not all companies sold which is what the author's statement also states. INCORRECT

Hence IMO A

Bunuel · Answer

Official Explanation

Reading the question: the prompt is a bit hefty, so we go to the question stem. This is an "explain" question. So there will be two things in seeming contradiction. We look for the transition from thing 1) to thing 2): the word "nevertheless." Thing 2) is shorter, so we start there. The mystery is that companies did not deplete their reserves even when prices were high. Why is that so crazy? Thing 1) will tell us: it's because companies keep their reserves for this purpose, so they can overall buy at lower prices. We will paraphrase the mystery as: "didn't use when high." The correct answer will resolve the mystery and be compatible with all of the facts in the prompt.

Applying the filter: (A) sounds reasonable to us at first as an explanation. But the prompt leads us to understand that companies would still want to deplete their reserves even if prices will be high in the future. If they thought prices would be higher next year, that would be a good reason to wait, but (A) doesn't say that. (A) is out. (B) doesn't explain "didn't use when high"; even if they need less oil than usual, they would still save by not having to buy when price are high. (B) is out. (C) doesn't explain "didn't use when high"; it gives a further reason for them to use now, so as not to buy now and save the buying for when prices are better. (C) is out. (D) is a good explanation for "didn't use when high"; companies generally did use when high, on average, but not all companies had to. It's a surprise solution but consistent with the data in the prompt. (D) is in. (E) is quite similar to (D) and quite close, but it's not as good an explanation.

Logical proof: we can analyze by cases to see that (D) is superior to (E). Namely, (E) could still be true even if prices were high for all companies involved; in such a case, (E) would limit the mystery, but it wouldn't explain the mystery.

The correct answer is (D).

KarishmaB · Answer

Some companies (say A, B, C and D) keep their own oil reserves for years in which average oil prices are exceptionally high.
So when oil prices are quite high, they can partially deplete their reserves, using oil that they bought earlier at lower prices, with the intention of buying oil to add back to their reserves when average oil prices are lower.

Last year, when average oil prices were astronomically high throughout the year not all of these companies partially depleted their reserves. (say A and B did not use their reserves) - Why?

A. Oil prices were also high the previous two years, so these companies expected oil prices to continue to be high.

Since oil prices were high last two years, perhaps A and B used a decent bit of oil from their reserves. Perhaps they have reached their lower limit on the quantity of oil they want to maintain in their reserve. So that could explain why they didn't use their reserve last year but this is a conjecture. Last year, the prices were "astronomically high" and are expected to be high in the future. I would still think that the companies would use their oil reserve in a year of "astronomically high" oil prices expecting to buy back next year with "high" prices.

B. Also for geopolitical reasons, many of these companies had lower-than-average demand for their services last year and required less oil for their operations.

They needed less oil but they did need oil. They should have used their reserves.

C. Some of these companies, which have some ability to influence the opinion of other oil buyers, expected oil prices to drop in following years.

All the more reason to use reserves last year.

D. Although oil prices were astronomical on average, some of these companies were able to buy the oil they needed at lower, acceptable prices.

This resolves the paradox. Companies A and B bought oil at lower, acceptable prices and hence did not use their reserves.

E. The practice of partially depleting reserves did occur on average, but without all companies individually partially depleting their reserves.

Exactly what the argument says. Doesn't explain why.

Answer (D)

Without (D), I think I would have some support for (A) to be the answer but (D) is a clear and acceptable explanation so no need to worry about (A).

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Some companies that consume large quantities of oil keep their own oil

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Some companies that consume large quantities of oil keep their own oil

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