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 author provides a couple pieces of evidence to recommend investing in Consolidated Industries, contending that the company that has major business in retail sale of home heating oil will be profitable because of an increased demand for the following several years. The validity of this recommendation can be questioned on many grounds. Critical questions must be answered in order to assess the validity of this recommendation.
The author makes the major assumption that what happened in the past will certainly happen in the future. Will the weather pattern actually continue for several more years? It is one thing to forecast the weather, but a forecast does not guarantee the weather for years to come. Will the following years actually be as cold as the forecasters are predicting? Although the facts cannot be disputed that the region experienced below average cold weather for the past few years, it is difficult to forecast into several years into the future. If the following years do not experience the same coldness, Consolidated Industries may not see a profit surge amidst the less-than-expected chill.
Even if the years to follow do turn out to be as cold, will people actually use more heating oil, or even keep using heating oil? The author assumes yes, without apt justification. There are many possibilities for people not choosing to use heating oil. Perhaps heating oil has been costly and people want to switch to a cheaper option with so many cold days. The author mentions new homes will further increase the demand. It is also a leap to assume that the new homes would continue use the traditional method of heating. Modern development could allow for these homes to be heated with a different type of fuel. In such a case, the new homes built in this region will not increase the demand for heating oil, and therefore do nothing to Consolidated Industries' profits.
The author makes the bold recommendation to Invest in Consolidated Industries without considering why other investment options would not be as profitable. The author essentially is assuming that all customers of heating oil will buy from Consolidated Industries. Even if the future were to prove cold, and the people to demand more heating oil, the author fails to mention why those people would choose Consolidated Industries over competitors. Seeing a good market opportunity, other companies could jump in to compete for a share of the profit, thereby reducing the effect of the increased demand on Consolidated's profitability.
While the author presents an interesting recommendation, the logical chain has several gaps that cannot be justified with the given information. The author could strengthen his claim by
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