Some analysts believe that the recent rise in oil prices is primarily due to increased speculation about the future value of oil. Specifically, the perception that current oil supply is lower than it should be, and that future supply will remain low, has led traders to inflate current oil prices. While most data show that oil production has been slowing down, it is possible that this speculation is contributing to the current hike in oil prices.
Which of the following, if true, would most weaken the claims made in the passage?The passage suggests that the recent rise in oil prices may be driven mainly by
speculation about future oil supply being low. It says production has been slowing, but claims speculation could be inflating current prices beyond what fundamentals alone would justify.
(A) Oil prices are largely determined by global demand and supply rather than by speculative trading.
This directly contradicts the main claim that speculation is a primary driver of the recent price rise. If prices are largely set by real supply and demand, then speculation is not a major cause of the hike. This is the cleanest, most direct weaken because it attacks the passage’s causal mechanism.
(B) Significant oil prospecting activities have taken place globally, leading to the discovery of many new oil wells in the past five years.
This weakens only indirectly. Discoveries do not necessarily translate into near term supply, and the passage is about “perception” of low supply plus price inflation now. New wells could reduce the plausibility of “future supply will remain low,” but it does not directly address whether speculation is driving today’s prices.
(C) Several alternative energy sources, such as bio-diesel, bio-fuel, and CNG, have been developed and are gaining popularity.
Not targeted. Alternatives gaining popularity might reduce future oil demand, but the passage’s story is about supply perceptions and speculative price inflation. This does not directly refute that.
(D) The rate of growth in oil consumption has slowed over the past two decades.
Too broad and not time linked. A two decade trend does not specifically explain a recent price rise, and it does not rule out speculation as a cause of the current hike.
(E) Environmentalists in the United States have conducted a long-standing campaign against the use of oil as a source of energy.
Irrelevant. A long-running campaign does not show why prices rose recently or whether speculation is inflating prices.
Answer: (A)