The Petroleum Act, which goes into effect next May, will be good for g

Question

The Petroleum Act, which goes into effect next May, will be good for gas station owners because it will eliminate the import duties levied on imported crude oil, which is refined to produce most of the gasoline in this country. The elimination of the duties will result in a savings of nearly 15 percent that can be passed along to the customers, thereby promoting higher sales and profits.

Which of the following, if true, would most weaken the argument that the Petroleum Act will be good for gas station owners?

Which of the following, if true, would most weaken the argument that the Petroleum Act will be good for gas station owners?

(A) Per capita consumption of gasoline has steadily increased over the last two years, and is expected to increase this year even without the Petroleum Act.
(B) Many gas station owners will not pass along to consumers all of the savings from the elimination of import duties.
(C) Duties levied on imported natural gas will not be eliminated by the Petroleum Act.
(D) Consumption of gasoline produced from domestic crude oil is expected to fall as a result of the Petroleum Act.
(E) The Petroleum Act includes a new 20 percent tax on gasoline sales

winterschool · Answer

(A) Per capita consumption of gasoline has steadily increased over the last two years, and is expected to increase this year even without the Petroleum Act.  Incorrect

so, more sales and more profits; support conclusion

(B) Many gas station owners will not pass along to consumers all of the savings from the elimination of import duties.  Correct

better than D; price will not decrease as a results sales will not increase and less profits

(C) Duties levied on imported natural gas will not be eliminated by the Petroleum Act.  Incorrect

contradicts with argument

(D) Consumption of gasoline produced from domestic crude oil is expected to fall as a result of the Petroleum Act.  Incorrect

it can be for less price of imported oil, so sales could increase

(E) The Petroleum Act includes a new 20 percent tax on gasoline sales  Incorrect

contradicts with argument

faizaShibli · Answer

I'm stuck between B and E. If I were to decide between them I'd pick E.

The question asks which statement will weaken the argument that ' petroleum act will be good for gas station owners'. From my understaning ' What aspect of petroleum act will not be good for gas station owners.

In option B even if the owners do not pass on the benefit to consumers wouldn't they still benefit from 15% subsidy as owners? It's there decision to not forward it and not gain higher sales but the benefit exists no?

For option E since the petroleum act places 20% tax on petroleum sales so even if there is a subsidy of 15% from less import duties but a tax on sales would reduce sales and nulify any savings from import duties.

Does this make sense? Can someone explain where my reasoning is wrong?

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Rahul257 · Answer

B says companies will not pass on 'ALL' of the savings to customers. It is not necessary to pass on everything to reduce prices. Whereas E says the Act will bring into effect a new 20% tarriff which is not mentioned in the stem and which needs to be assumed to be true.

Rahul257 · Answer

B says companies will not pass on 'ALL' of the savings to customers. It is not necessary to pass on everything to reduce prices. Whereas E says the Act will bring into effect a new 20% tarriff which is not mentioned in the stem and which needs to be assumed to be true.

ZahidPavel · Answer

Though stem doesn't say anything about 20% levy on sales,i think "E" should be the answer.

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Ghostrider3147 · Answer

(B) Many gas station owners will not pass along to consumers all of the savings from the elimination of import duties.

if savings do not pass to consumers then the amount will be saved by the owners and thus be profitable,even no increase in sales.

B wrong.

(E) The Petroleum Act includes a new 20 percent tax on gasoline sales.

Including the 20% tax will nullify the effect of reduced import duty.Therefore, weakens the conclusion

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pavantejatula · Answer

Aren't gas stations different from gasoline stations? I mean gas station owners sell natural gas. So C can most weaken the argument. If both are the same then I can agree with E. But what can make us think both are the same?

DmitryFarberMPrep · Answer

pavantejatula

No, in colloquial English "gas" is commonly used to refer to "gasoline." When we say "gas station," that always means a gasoline station, whether or not natural gas is also available.

guddo · Answer

The Petroleum Act, which goes into effect next May, will be good for gas station owners because it will eliminate the import duties levied on imported crude oil, which is refined to produce most of the gasoline in this country. The elimination of the duties will result in a savings of nearly 15 percent that can be passed along to the customers, thereby promoting higher sales and profits.

Which of the following, if true, would most weaken the argument that the Petroleum Act will be good for gas station owners?

Which of the following, if true, would most weaken the argument that the Petroleum Act will be good for gas station owners?

The argument says the Act will help gas station owners because eliminating import duties on crude oil will lower gasoline costs, and those savings can be passed on to customers, leading to higher sales and profits.  The key assumption  is that the Act does not impose some other cost that would outweigh that benefit.  If the Act adds an even bigger new tax on gasoline sales, the argument falls apart.

(A) Per capita consumption of gasoline has steadily increased over the last two years, and is expected to increase this year even without the Petroleum Act.

This does not weaken the argument much. Rising gasoline consumption does not show that the Act will not also help gas station owners.

(B) Many gas station owners will not pass along to consumers all of the savings from the elimination of import duties.

This weakens the argument somewhat, because the argument says higher sales will come from passing savings on to customers. But owners could still benefit by keeping more of the savings as profit.

(C) Duties levied on imported natural gas will not be eliminated by the Petroleum Act.

This is irrelevant. The argument is about gasoline made from crude oil, not natural gas.

(D) Consumption of gasoline produced from domestic crude oil is expected to fall as a result of the Petroleum Act.

This does not clearly weaken the claim about gas station owners. Gas station owners sell gasoline; the source of the crude oil does not by itself show that owners will be worse off.

(E) The Petroleum Act includes a new 20 percent tax on gasoline sales

This weakens the argument the most. The argument relies on a savings of nearly 15 percent from eliminating import duties. A new 20 percent tax on gasoline sales would more than offset that savings and could reduce profits instead of increasing them.

Answer: (E)

vasu1104 · Answer

gas owners imports crudes oils and pay import duties on it. 
 but new petroleum act will eliminate this from next may. 
 this will help them nearly 15% and that can be passes along to customers. 
 this will promotes higher sales and profits.

arguments jumps from saving 15% from imported duties to higher sales and profits.

(A) Per capita consumption of gasoline has steadily increased over the last two years, and is expected to increase this year even without the Petroleum Act.
so this rather strengthen the conclusion as more people will buy gas and that in turn increase the sales and profits eventually. reject. 
 
(B) Many gas station owners will not pass along to consumers all of the savings from the elimination of import duties.
but then there are others who can pass. so conclusion still holds true. reject.

(C) Duties levied on imported natural gas will not be eliminated by the Petroleum Act.
but are those gas used to create gasoline for these people.? out.

(D) Consumption of gasoline produced from domestic crude oil is expected to fall as a result of the Petroleum Act.
that means they will have to import more of oil and that in turn will help them save more money as result of new act. so this also helps. out.

(E) The Petroleum Act includes a new 20 percent tax on gasoline sales
okay then here is the thing. you remove import duties but you add on 20% tax on sales. so eventually no saving or profits. so this helps attack the plan

The Petroleum Act, which goes into effect next May, will be good for g

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The Petroleum Act, which goes into effect next May, will be good for g

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