Difficulty: Medium

Average Score: 64%

This information is from a 2015 U.S. Energy Information Administration (EIA) report.
Oil Production
Short-Term Energy Outlook
January was the seventh consecutive month in which monthly average North Sea... crude oil prices decreased, reaching $48 per barrel, the lowest since March 2009. The price decline reflects continued growth in U.S. oil production and strong global supply, amid weaker global oil demand growth. This contributed to rising global oil inventories. In January, estimated total commercial oil inventories reached their highest level since August 2010.
Gasoline Prices
Driven largely by falling crude oil prices, U.S. weekly regular gasoline retail prices averaged $2.04 per gallon on January 26, the lowest since April 6, 2009. EIA expects U.S. regular gasoline retail prices, which averaged $3.36 per gallon in 2014, to average $2.33 per gallon in 2015. The average household is now expected to spend about $750 less for gasoline in 2015 compared with last year because of lower prices. The projected regular gasoline retail price increases to an average of $2.73 per gallon in 2016.

Which statement best explains the situation described in the paragraphs?

Rationale

Crude oil production levels have caused U.S. gasoline prices to fall.

The passage primarily discusses the USDA's role in managing agricultural insurance and research, but the best explanation relates to the impact of crude oil production on gasoline prices. Increased production typically leads to lower prices due to higher supply, which aligns with the context of the question.

A (Crude oil prices in 2014 encouraged U.S. families to buy less gasoline in 2015.) YOUR ANSWER

This statement suggests a direct cause-and-effect relationship between crude oil prices and gasoline consumption, which is not supported by the passage. The passage focuses on USDA activities and does not provide evidence or context regarding consumer behavior based on previous oil prices.

C (Greater crude oil reserves have caused the U.S. government to reduce gasoline prices.) YOUR ANSWER

While greater reserves may influence prices, the statement inaccurately attributes price reduction directly to government action rather than market dynamics. The passage does not mention government intervention in gasoline pricing, making this explanation irrelevant to the content provided.

D (Lower crude oil production will cause U.S. gasoline prices to return to 2014 levels by 2016.) YOUR ANSWER

This statement speculates on future prices based on hypothetical production levels, which is not addressed in the passage. The focus is on the relationship between production levels and current prices rather than predicting future trends.

Conclusion

The best explanation, supported by the context of the question, is that crude oil production levels have caused U.S. gasoline prices to fall. This conclusion aligns with economic principles where increased supply typically leads to lower prices, making option B the most logical choice. The passage's focus on agricultural insurance does not directly relate to crude oil but provides a backdrop for understanding market dynamics.

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