Utrania was Formerly a Major Petroleum Exporter, But in Recent Decades Economic Stagnation GMAT Critical Reasoning

Question: Which of the following most logically completes the argument?

Utrania was formerly a major petroleum exporter, but in recent decades economic stagnation and restrictive regulations inhibited investment in new oil fields. In consequence, Utrania oil exports dropped steadily as old fields became depleted. Utrania's currently improving economic condition, together with less restrictive regulations, will undoubtedly result in the rapid development of new fields. However, it would be premature to conclude that the rapid development of new fields will result in higher oil exports, because __________.

1. the price of oil is expected to remain relatively stable over the next several years.
2. the improvement in the economic situation in Utrania is expected to result in a dramatic increase in the proportion of Utranian's who own automobiles.
3. most of the investment in the oil fields in Utrania is expected to come from foreign sources.
4. new technology is available to recover oil from old oil fields formerly regarded as depleted.
5. many of the new oil fields in Utrania are likely to be as productive as those that were developing during the period when Utrania was a major oil exporter.

“Utrania was formerly a major petroleum exporter, but in recent decades economic stagnation” – is a GMAT Critical question. To answer the question, a candidate can by either finding a piece of evidence that would weaken the argument or logical flaws in the argument. GMAT critical reasoning tests the logical and analytical skills of the candidates. This topic requires candidates to find the strengths and weaknesses of the argument, or find the logical flaw in the argument. The GMAT CR section contains 10 -13 GMAT critical reasoning questions out of 36 GMAT verbal questions.

Answer: B
Explanation: GMAT critical reasoning tests the reasoning skills along with the candidate's logical and analytical thinking abilities. The candidate has to deduce the correct option by finding the logically correct argument.

Let us check the statements on which the argument depends:

1. Although the author anticipates an increase in oil production, he does not anticipate an increase in exports. The argument is that it would not make economic sense to export the oil if the price of oil were predicted to fall sharply. On the other hand, if the price of oil is predicted to remain unchanged, we would anticipate that a rise in production would result in a rise in exports. Choice (A) can be disregarded because it is unable to account for the apparent disparity.
2. Why won't Utrania export the oil when we know the new fields will help restore the supply? So maybe there will be more demand for oil in Ukraine. We can anticipate an increase in domestic demand for oil if the improvement in economic conditions leads to a sharp increase in the ownership of automobiles. In order to meet the increased domestic demand, a bigger portion of Utrania's oil production will have to remain there even if it will be producing more oil overall. B is the right answer since it shows how supply might rise without exports rising.
3. Where the investment comes from is irrelevant. We should enhance the oil supply if new oil fields are being developed quickly. Why won't exports increase if the supply of oil is increased? Choice (C) can be disregarded because it doesn't address the apparent disparity.
4. The new fields will enhance the supply of oil, as we well know. We have even more reason to anticipate an increase in oil supplies if we choose option (D). We will be able to get additional oil from the "depleted" fields in addition to the oil from the new fields. This further indicates a rise in exports and does not support the author's thesis. D is the right answer.
5. If option (E) said that the new fields are NOT likely to be as productive as those created when Ukraine was a big exporter, then option might be alluring. If so, we would have to question if the quick development would result in a significant increase in the oil supply. However, as it is structured, option (E) only strengthens our belief that the additional fields SHOULD result in an increase in oil exports. Since (E) does not support the author's conclusion, it can be disregarded.

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