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 experi

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.”

The letter presents the metrological conditions of a region in the United States and in the end, suggests an advice to a client who wishes to invest in a profitable business unit. As per the statistics, as mentioned in the letter, northeastern United States experiences harsh cold winter and will continue to do so in few more coming years. Residents of this region rely on home heating oil in order to heat their homes. So the firm suggests the client to invest in any Consolidated Industry whose major business is usually to deal with the home heating oil.

The advice provided by the firm seems quite pragmatic ostensibly. Since people residing in the said region will have to take measures against the harsh cold of winters, they need to make necessary arrangements for the winter so as not to fall prey to the freezing temperatures. Also, they have already relied on the heating oil for warmth in the past, so it can be predicted that they will continue to do so for years to come. So the suggestion provided by the firm seems quite logical.

However, there is scope for other possibilities as well. It is not necessary that the residents of the region will continue to make use of the same oil. It may be the case that an alternative cheaper but efficient fuel or some other device would flourish in the market and people would shift their attention towards it. In such a scenario, the already used heating oil would become a redundancy and the client, to whom the letter was addressed, would be at a great loss.

Also, the heating oil already used after being burnt might be giving rise to by-products which could potentially be damaging to the environment. If this is the case, then the government is likely to ban the utilization of such a product in the future.

In conclusion, I would like to state that after thoroughly analyzing the advice of the firm; after checking all the advantages and disadvantages of investing in the business unit mentioned in the letter, the client ought to further investigate the matter so as to reach a profitable position.

Someone’s
This letter from an investment advisory firm predicts an increased demand for heating oil in the northeastern United States and therefore, they advise their client to invest in Consolidated Industries which deals in the retail sale of home heating oil. The arguer states that the northeastern states have cold winters and oil is used as the main fuel for heating homes. Furthermore, these states saw 90 days in the past year when the temperature was below-average and it has been forecasted that this weather pattern will continue for many more years. The arguer claims that the construction of new homes in this region adds to the above mentioned reasons for an increase in the demand for heating oil. The argument seems convincing when it is given a cursory reading, but an in-depth analysis reveals several logical fallacies that have rendered the argument indefensible.

A major lacuna in the given argument is the unjustified assumption that the residents of the northeastern region will need more heating oil in case the weather remains the same for the next several years. It is likely that the people may switch to other forms of central heating facilities or they may not need any additional oil as the oil being used by them is sufficient for heating their homes. Moreover, the construction of new homes indicates the possibility of some other modern heating system being installed that is probably electrical and does not require the use of heating oil at all. Therefore, the assumption that there will be an increase in the demand for heating oil in the northeastern region is unwarranted.

Another lacuna in the given argument is that the arguer has unfairly assumed that Consolidated Industries caters exclusively for the northeastern states of the US. It is highly probable that Consolidated Industries supplies heating oil to other parts of the country. At the same time, it is likely that the residents of the northeastern states do not use the heating oil marketed by Consolidated Industries. There may be other local industries in the northeastern region that provide heating oil which is more popular with the residents of this region. Therefore, neither the cold winters nor the construction of new homes in the northeastern region may be instrumental in affecting either the sales of Consolidated Industries or the demand for its heating oil.

On the contrary, it is likely that Consolidated Industries is facing losses as they supply heating oil to a region that does not require the same. It is also likely that the oil manufactured by Consolidated Industries is used more often by factories and industries as compared to homes. Moreover, as the arguer makes no mention of the present sales statistics of Consolidated Industries, it would be unreasonable to assume that the demand of heating oil marketed by the company is on the rise.

Even if we assume that there is an increase in the demand for heating oil in the northeastern region and that Consolidated Industries is the sole provider for heating oil in that region, the arguer cannot make the hasty recommendation that one should invest in Consolidated Industries. This is because it is not necessary that catering to an increase in demand would lead to profits for the company. The company may require additional manufacturing units, more raw materials, additional workers etc. In the absence of detailed information on the finances involved in manufacturing the additional heating oil and the profits brought in by the sale of the heating oil, one cannot be convinced that the investments would easily be recovered and that the company will have good profits. In view of the above, the advice given by the arguer seems extremely unreasonable.

In sum, the inference drawn by the arguer is fallacious, at least without additional evidence to support it. The arguer needs to bolster the argument with information related to the sales statistics of Consolidated Industries including the region where it operates. Moreover, there is the requirement of evidence that can prove that the cold weather would actually lead to an increase in the demand for heating oil.