The following appeared in a letter from a firm providing investment advice to a client. "Homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating. Last year that region experien

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The following appeared in a letter from a firm providing investment advice to a client. "Homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating. Last year that region experienced twenty days with below-average temperatures, and local weather forecasters throughout the region predict that this weather pattern will continue for several more years. Furthermore, many new homes have been built in this region during the past year. Because of these developments, we predict an increased demand for heating oil and recommend investment in Consolidated Industries, one of whose major business operations is the retail sale of home heating oil".
Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation and the argument on which it is based are reasonable. Be sure to explain how the answers to these questions would help to evaluate the recommendation.

The writer tries to persuade his clients to invest their money with Consolidated Industries, whose major venture is the retail sale of home heating oil since the northeastern United States is the future predicted market for heating oil consumers. To bolster his argument he reported the last year below-average temperature as well as new developments in the region. However, if looked closely, the writer made some unsubstantiated assumptions in order to lure his clients, which are not concrete and are lacking critical persuasion.

Firstly, the writer quoted the fall of temperature below-average for last year and also forecasters predicted that this fall is most likely to repeat in several more years. But, since this fall of temperature only lasted for twenty days in spite of the whole season, even if the people resort on using oil for heating, it is very much likely that this short span will not substantially increase the heating oil consumption in a profitable manner. The writer needs to address the actual increase in the consumption of heating oil in a more statistical fashion. Also the viewpoint of international forecasters may also be sought in order to effectively predict the future trends of this weather.

Secondly, the writer made a point that since new homes are being built in the region, it will increase the oil consumption. Nevertheless, it is still unclear that what means they will be adopting for heating their homes? It is very much likely that these newly built homes may encompass modern water-heating plants in-built. If that would be the case, it will strongly refute the writer’s viewpoint. Also, writer needs to be, again, a bit more statistical in his tone regarding the number of newly built homes, the predicted increase in the consumers of heating oil and the net profit expected from this development.

Lastly, the writer, based on his unsubstantiated assumptions, recommend the clients to invest in the company. The information on the other potential heating oil suppliers in the markets of northeastern United States cannot be ignored. Since, it is likely that there might be other industries also looking for such ventures or, providing other heating solutions, then the writer’s perceived increase in demand of heating oil and in turn the company’s profit may decline adversely.

In sums, the writer needs to provide the actual consumption of heating oil in current year and its predicted rise in a more statistical manner. The information of other heating methods being implemented in the new homes is also mandatory for correct judgement. And lastly, whether other companies are also looking for such market or not, will greatly affect the profit that Consolidated Industries is expecting in the coming years.

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