Logical Reasoning

PT155 · S2 · Q13 Commentator: The worldwide oil crisis

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Commentator: The worldwide oil crisis of 1973 was not due to any real shortage of oil, but was the result of collusion between international oil companies and oil-producing countries to artificially restrict the supply of oil in order to profit from higher prices.

Conclusion

The oil crisis of 1973 wasn't due to the shortage of oil but rather the collusion between oil companies and oil-producing countries to restrict supply in order to profit from higher prices.

Evidence (this is shown by the fact that)

After 1973, the profits of oil companies showed large increases, as did the incomes of oil-producing countries.

Evaluate

Given that ... the profits of oil companies and oil-producing countries rose greatly after 1973, How could we argue that ... the oil crisis of 1973 was caused by a real shortage of oil, and wasn't just the result of collusion?

Well, let's start by supposing there was a shortage of oil. As supply shrinks relative to demand, the price of oil would rise. People used to pay $1 / gallon and now they're paying $3 / gallon, as a reflection of demand outpacing supply.

Meanwhile, Profit = Revenue - Expenses

If people are paying higher prices due to short supply, then the revenue per gallon has increased. Have the expenses of the oil producers increased?

There's not necessarily any reason to think expenses went up, unless it's common sense that when oil is in short supply, oil producers have to spend more money to extract/refine/distribute it.

So it's reasonable to think that if gas prices rise due to short supply (while expenses of producing gas stay pretty stable), then that would cause the profit margin on gas to go up all on its own.

Would that explain the profits of oil companies and oil-producing countries going up after 1973? Maybe so, maybe not. Since oil was in short supply, the overall total gas being sold is lower. So even though their profit margin on gas would go up, their overall profits might not go up because of lower volume of sales.

Still, it's coherent to argue that depending on how much revenue and expenses did / didn't go up, a short supply on its own could explain an increase in profits.

But we would probably guess that what LSAT really wants to test is the famous Causal reasoning flaw. The author is presenting a Curious Fact premise:

One possible explanation is that the companies/countries were colluding to artificially jack up the price in order to boost profits. But that's not necessarily the only possible explanation, so it's flawed for the author to be so sure of her causal interpretation of these events.

Goal

Look for an answer calling out the author's failure to consider Alternate Explanations for why the profits rose after 1973, or look for an answer to highlight something that would make the author's causal storyline (oil companies/countries colluded) seem less plausible.

13.

The reasoning in the commentator's argument is most vulnerable to criticism on the grounds that the argument

  1. Correct

    fails to consider the possibility

    Why this is right

    When a Flaw answer begins with fails to consider / overlooks the possibility, we can ask ourselves whether the following idea would be an objection. Could we say, "Hey, author -- sometimes a party can benefit from an event without helping to bring about that event"? Sure! That maps onto this conversation pretty easily. "Hey, author, isn't it possible that oil companies/countries benefited from the higher prices of oil (brought about by a real shortage of oil) without helping to bring about the higher prices of oil (via collusion and artificial price inflation)?" This answer reflects our objection that, "Just because someone benefited from something doesn't mean they caused it." Just because Clorox got rich off sanitizing wipes during the covid pandemic doesn't mean that Clorox hosted a bunch of super-spreader events or actively contributed to the misinformation campaign that facilitated the spread of covid.

    Skill tested: Flaw · how this choice captures the argument's function is the move to repeat next time.

    86% picked this

  2. presumes, without providing justification, that

    Too Strong: only

    When answers begin with takes for granted / presumes / fails to establish, we can ask ourselves whether the author needs to assume this. Just like in Necessary Assumption, tons of answers on Flaw are wrong because they accuse the author of assuming something way stronger than anything the author seemed to be thinking. The author only mentions oil companies/countries benefiting from the 1973 oil crisis, but does that mean the author assumes only oil companies/countries benefited? Of course not. That's like saying that when someone says, "Black lives matter" they are assuming "only Black lives matter".

    3% picked this

  3. rests on using the term

    Wrong Flaw: not Equivocation

    This answer refers to the famous Equivocation flaw, in which the author uses the same term or concept twice in the argument, but each usage means something different. While there are multiple definitions to "profit" (it could mean "revenue was greater than expenses" or it could mean "provides benefit", as in She profited from the wisdom of her grandfather), this argument is only using profit in the fiscal sense of making money.

    1% picked this

  4. fails to establish that there

    Not Assumed: surplus

    When answers begin with takes for granted / presumes / fails to establish, we can ask ourselves whether the author needs to assume this. Did the author need to assume that prior to the oil crisis in 1973, there was an oil surplus? No. The author is assuming there wasn't a shortage, but that doesn't mean he's assuming there was a surplus. It doesn't have to be one or the other. There can be a "balanced budget" between supply and demand. That's when prices end up being fairly constant.

    3% picked this

  5. fails to consider the possibility

    Irrelevant Objection

    When answers begin with fails to consider / overlooks the possibility, we can ask ourselves whether the idea that follows would be a weakening objection. Could we say, "Hey, author --- events that occur simultaneously could be causally related"? That doesn't match up with the conversation at all. Were there simultaneous events described? Not really. There was an oil crisis in 1973. And then after 1973, the profits of oil companies/countries went up. Those are consecutive, not simultaneous. Furthermore, the author is thinking those two are causally related. He just thinks the relationship isn't "real shortage caused crisis, which caused higher profits". He thinks "collusion caused artificial shortage, which caused crisis, which caused higher profits".

    8% picked this

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