Question

If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil. Which of the following conclusions is best supported by the statement in the passage?

• A. Domestic producers of oil in open-market countries are excluded from the international oil market when there is a disruption in the international oil supply.
• B. International oil-supply disruptions have little, if any, effect on the price of domestic oil as long as an open-market country has domestic supplies capable of meeting domestic demand.
• C. The oil market in an open-market country is actually part of the international oil market, even if most of that country’s domestic oil is usually sold to consumers within its borders.
• D. Open-market countries that export little or none of their oil can maintain stable domestic oil prices even when international oil prices rise sharply.

Answer 1

The correct option is C The oil market in an open-market country is actually part of the international oil market, even if most of that country’s domestic oil is usually sold to consumers within its borders.

Option (c)

If the oil market in an open-market country were independent, fluctuations in international oil prices would not affect domestic oil prices. However, if the statement about oil-supply disruption is true, it is evident that domestic oil prices are dependent on the international market and hence that the domestic oil market is a part of the international oil market. Therefore, C is the best answer. B and D are not supported, since each contradicts the claim that an international oil-supply disruption will lead to rising oil prices in an open-market nation. Nor is A supported, since the statement provides information only about the effect of disruption on oil prices, not domestic producers or distributors