Homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating.

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 90 days with below-average temperatures, and climate forecasters at Waymarsh University 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 author claims that because of those trends mentioned in the argument, they predict an increased demand for heating oil and recommend investment in Consolidated Industries.  However, some questions need answering to evaluate his claims.

The author states that most home in the northeastern United States have traditionally used oil as their major fuel for heating.  Nevertheless, how many people are still using oil as major fuel now?  It’s true that oil is traditionally used, but technology is advancing day by day, and other methods that is much more eco-friendly are coming out, it is possible for the residents to choose a new way for heating in the future.  The author can conduct a survey, asking about the heating source the residents currently use and the proclivity to use other sources.

Even if the major fuel for heating is still oil now, is the climate forecasters’ prediction reliable?  If they are those experts who have collected abundant of consequential data and made lots of discussion in order to permit this prediction, that seems convincing.  However, if they are puerile college students who gather those data briefly from Google or other search engine just for passing their course, then the prediction may not be so accurate.

The author also claim that many new homes are being built in region in response to recent population growth.  However, what is the percentage of homes that will be occupied?  If the homes are built but a few families tend to live in, then the number of new homes can not mirror the increase of residents with exactitude.  For example, if 2000 homes are built and only 20 families are interested in them, then the rate will be 1%, which is very low.  More data should be collected in order to support this claim.

Granted that the increase of residents highly relates to the increase of new homes is true, how much can the retail sale of home heating oil benefit from the trend?  The author recommend investment in Consolidated Industries, however, if the profit from retain sale is already small, and the additional profit due to the increased demand is totally a nuance, then the investment in that company will not worth.

To strengthen his or her statement, the author should answer questions as above mentioned.