Reading Passage Question
The Agency for Crude Oil estimates that China’s imports of crude will increase 8 percent a year, a figure more than twice the predicted rate of growth in global demand. To protect Chinese farmers, the group that has gained least from the economic reforms, and for fear of social unrest, the People’s Congress has held the price of diesel at the pumps artificially low. These price controls mean that Chinese state-owned refineries are losing vast sums of money supplying domestic markets. To offset these losses, the refinery managers must export fuel and, as a consequence, create the single most important cause of the chronic fuel shortages facing the domestic market of China.
China’s energy companies are desperately trying to resolve the issue by securing more suppliers of crude. Their greatest hope lies with Russia, which currently only supplies a small fraction of China’s annual consumption. Chinese officials would dearly love a pipeline from the Siberian oilfields. But Russia is anxious to keep control of its export market and is understandably reluctant to provide its neighbor’s refineries with oil, only to see it sold on to a third party in order to cross-subsidize the artificially low cost of fuel in China’s domestic markets.
Perhaps a more viable solution lies with a price increase in the cost of diesel in Chinese domestic markets. This might well mean that the current runaway demand will be curtailed and Chinese refineries will be better able to supply their home markets.
“The Agency For Crude Oil Estimates that China’s Imports of Crude Will” is a GMAT reading comprehension passage with answers. Candidates must have a solid grip in English GMAT reading comprehension. There are 5 multiple choice questions in the above GMAT Reading Comprehension passages. GMAT Reading Comprehension Questions are delineated to evaluate candidates’ abilities to analyze and be conceptual for the answers. Candidates can brace up and take preparation by answering GMAT Reading Comprehension Practice Questions.
Solution and Explanation
Q1. Which of the following statements best captures the general theme of the passage?
- the solution to China’s fuel problems
- China’s fuel crisis and potential solutions to it
- how China can solve its fuel troubles
- the nature of China’s fuel predicament
- China’s fuel catastrophe and its explanation
Answer: B
Explanation: The passage states about the crisis in China. The agency for Crude Oil evaluates that China’s imports of crude will hike by 8 percent a year. It is a figure more than twice the rate which was predicted for growth in global needs. Perhaps a more applicable solution stays with a price increase in the cost of diesel in Chinese domestic markets. Thus, China's fuel crisis and the possible solutions to cope up with it has been mentioned as the general theme of the passage. Therefore, option(B) will be an appreciable answer for this question.
Q2. Which of the following is mentioned as a solution to fuel shortages?
- securing more suppliers of crude
- a pipeline from the Siberian oilfields
- an end to refineries selling overseas
- an end to the artificially low cost of fuel on China’s domestic markets
- curtailment of the current runaway demand
Answer: D
Explanation: The price controls in the passage means that Chinese state-owned refineries are losing a huge amount of money supplying domestic markets. To resist these losses, the refinery managers must export fuel. Also, as a result, create the single most important origin of the lifelong fuel shortages in China's domestic market. So, an end to the low cost of fuel in the domestic markets of China is a mere solution to the fuel shortage. Thus, option(D) is the correct answer.
Q3. Which topic is not touched upon in the passage?
- fiscal policy
- international relations
- fuel exports
- retail price
- rationing
Answer: E
Explanation: Russia and China’s international relations are mentioned in the passage. The topics of fuel exports and retail price of diesel at the pump are also mentioned in the passage. Fiscal policy is about how governments spend and tax in order to accomplish targets. Also, this topic is capped in the passage in terms of the Chinese policy to keep the price of oil products little. However, rationing is not mentioned in the passage. So, option(D) is applicable against this question.
Q4. The author would agree least with which of the following statements?
- The Chinese government was not ready to raise the price of oil products.
- The artificially low price of oil products gives Chinese manufacturers an unfair advantage in foreign markets.
- Russia holds the solution to its neighbor’s shortage.
- Chinese officials express frustration with Russian reluctance to increase supplies.
- The supply crunch comes as the country’s refineries continue to supply overseas markets.
Answer: C
Explanation: Russia is concerned to keep control of its export market and is understandably unwilling to grant its neighbor’s refineries with oil. It is only to see it sold on to a third party just to cross-sponsor the artificially low cost of fuel in China’s domestic markets. Although a more suited solution lies with a price boost in the cost of diesel in Chinese private markets. Russia holds the solution to the shortage of its neighbor would be least agreed by the narrator. Thus, option(C) is the fruitful answer.
Q5. Which of the following reasons were not given for China keeping a lid on prices at the pumps?
- To prevent social unrest over the price of gasoline.
- To protect farmers.
- To protect the group that has gained least from the economic reforms.
- A fear of social unrest.
- Fearing social unrest, China has kept the price of diesel artificially low
Answer: A
Explanation: The Agency for Crude Oil guesses that China’s imports of crude will hike by 8 percent a year. It is an amount which is more than twice the rate of growth in global demand which was predicted. The group gained least from the economic reforms, the People’s Congress has held the price of diesel at the pumps artificially low. To protect Chinese farmers is the due attention in the passage. Thus, option(A) is the correct answer for the above question.
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