Since 1995, Congress has exempted oil companies that have leases issue

Question

Since 1995, Congress has exempted oil companies that have leases issued by the federal government allowing them to drill for deep-water oil off the Gulf of Mexico from royalty payments as an incentive to spur development in times of low oil and gas prices. These leases were supposed to have included a provision that reinstates the royalties should the market prices of oil and gas exceed a certain level. Because of an error by the federal government, however, the language that reinstates the royalties is missing from the more than 1,100 leases issued by the U.S. government in 1998 and 1999. Since the market price of oil and gas has recently risen far above the threshold levels, this error could allow the oil companies to reap a windfall of more than $10 billion through the life of the leases. In response, the government is pressuring the oil companies to renegotiate the leases. The executives of the oil companies strongly oppose renegotiation; all have issued statements stating that they expect the government to honor the terms of the contracts and that renegotiating a duly signed agreement would set a bad precedent.

Which of the following statements best reflects the position of the oil company executives?

A. Opportunity seldom knocks twice.

B. Do unto others as you would have done unto you.

C. One man`s loss is another man`s gain.

D. You don`t change the rules in the middle of the game.

E. Revenge is so sweet.

Which of the following statements best reflects the position of the oil company executives?

A. Opportunity seldom knocks twice.

B. Do unto others as you would have done unto you.

C. One man`s loss is another man`s gain.

D. You don`t change the rules in the middle of the game.

E. Revenge is so sweet.

Bunuel · Accepted Answer

OFFICIAL EXPLANATION

The oil executives argue that the leases should not be renegotiated because a duly executed contract should be strictly honored. The best answer choice will reflect this argument.

(A) This is a tempting answer because the windfall from the government error is certainly an opportunistic event that is unlike to repeat itself. However, it does not reflect the argument that the oil executives have made justifying their opposition to renegotiating the leases and therefore is not the best answer.

(B) The oil company executives would not agree with this answer choice: should the positions be reversed, they would certainly not want the government to hold 
them to a contract that contains an error unfavorable to them.

(C) While it is true that the taxpayers’ loss is the oil companies’ gain, this answer choice does not reflect the argument that the oil executives have made justifying their opposition to renegotiating the leases and therefore is not the best answer.

(D) CORRECT.  The executives argue that the government should strictly honor the agreement already in place; i.e., they should not “change the rules in the middle of the game.”

(E) While the unexpected windfall may indeed be “sweet” to the oil executives, getting “revenge” requires that some prior injustice was inflicted by the government upon the oil companies. There is nothing in the passage that indicates or implies such.

praveenkuragodi · Answer

The Scenario here: Oil companies made a deal with government and pay a royalty to government when the Oil prices jump. But, the Clause mentioning the precedent is missing. And now the Government wants to change the signed leases.

A. There are no multiple opportunities here.

B. Oil company is not taking any revenge.

C. Comes close the government's loss is Oil companies gain. Since the Oil prices have recently risen, the Oil companies will reap profits in the near future.

D. Best explains the Oil company's position, since the game (leasing) was already signed and the rules of the game were agreed. You cant change it in the middle of the game.

E. Nobody is taking any revenge.

Skywalker18 · Answer

Since 1995, Congress has exempted oil companies that have leases issued by the federal government allowing them to drill for deep-water oil off the Gulf of Mexico from royalty payments as an incentive to spur development in times of low oil and gas prices. These leases were supposed to have included a provision that reinstates the royalties should the market prices of oil and gas exceed a certain level. Because of an error by the federal government, however, the language that reinstates the royalties is missing from the more than 1,100 leases issued by the U.S. government in 1998 and 1999. Since the market price of oil and gas has recently risen far above the threshold levels, this error could allow the oil companies to reap a windfall of more than $10 billion through the life of the leases. In response, the government is pressuring the oil companies to renegotiate the leases. The executives of the oil companies strongly oppose renegotiation; all have issued statements stating that they expect the government to honor the terms of the contracts and that renegotiating a duly signed agreement would set a bad precedent.

Which of the following statements best reflects the position of the oil company executives?

A. Opportunity seldom knocks twice.

B. Do unto others as you would have done unto you.

C. One man`s loss is another man`s gain.

D. You don`t change the rules in the middle of the game.

E. Revenge is so sweet.

Which of the following statements best reflects the position of the oil company executives?

A. Opportunity seldom knocks twice. - Incorrect

B. Do unto others as you would have done unto you. - Incorrect

C. One man`s loss is another man`s gain. - Incorrect - This is not the position of Oil execs

D. You don`t change the rules in the middle of the game. - Correct - The executives of the oil companies strongly oppose renegotiation; all have issued statements stating that they expect the government to honor the terms of the contracts and that renegotiating a duly signed agreement would set a bad precedent.

E. Revenge is so sweet.- Incorrect - there is no discussion about any revenge

Answer D

AjiteshArun  ,  GMATNinja  ,  mikemcgarry  ,  egmat  ,  RonPurewal  ,  DmitryFarber  ,  MagooshExpert  ,  ccooley  ,  GMATNinjaTwo  , 
- In my opinion this question does not feel like GMAT like question

MagooshExpert · Answer

Hi Skywalker18 , You're right, this is definitely a very unusual question, and it would be pretty unlike the GMAT to have a question based around aphorisms like this. However, I've definitely seen questions that are somewhat similar (that ask about a general statement that someone in the passage might agree with), so the kind of thinking required for this question is still very GMAT-like

Hope that helps!

-Carolyn

VerbalBot · Answer

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Since 1995, Congress has exempted oil companies that have leases issue

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Since 1995, Congress has exempted oil companies that have leases issue

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