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

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

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 specific evidence is needed to evaluate the argument and explain how the evidence would weaken or strengthen the argument.

In the letter, the author predicts that there will be an increase in demand of heating oil and therefore recommends investment in Consolidated Industries, a heating oil retailer. One of the reasons that led to the conclusion is that there are homes newly built in this area. Although the author makes an assertive argument, specific evidence is needed for the argument to be evaluated.

First, the new homes built in this region do not guarantee an increase of residents.  There are a lot of factors affecting the sales of these homes. When they consider purchasing the houses, people would take quality of the house, surrounding environment and facilities into account. If customers were not satisfied with the new houses, there might be hardly any increase of residents. To be sure about the change in local population, the sales data of these new homes needs to be considered. If most of the newly built homes were sold, an increase of residents can be predicted and vise versa.

Second, even if the surrounding homes sold well, the usage of heating oil is not clear. According to the letter, oil is the traditional major heating fuel, but for the new homes, there are also other heating options. The newly built house could have been equipped with radiator or air conditioner as a solution to the cold winter. And since these homes are new, advanced heating devices or fuel that is more economically or environmentally friendly than oil could have been invented and introduced. The heating method used by these new homes has to be determined in order to predict the shift in heating oil using. Should heating oil remains to be the option of the surrounding new homes, an increase in the demand of heating oil is reasonable.

Third, an increase in the demand of heating oil does not necessarily make Consolidated Industries a good investing option. The author mentions in the letter that Consolidated Industries’ business focuses mainly on the retail sale of home heating oil. Heating could be sold as a complementary part of the new homes and the developer would purchase heating oil through whole sale. Then the newly built homes would hardly have any impact on Consolidated Industries’ revenue. Even if the owners of the new homes purchased oil through retail, Consolidated Industries might not be their best choice. To be clear about the sales of heating oil of Consolidated Industries, a contract on heating oil purchasing between Consolidated Industries and the new homes is necessary. Without a contract, an increase in Consolidated Industries’ heating oil sales is untenable.

As explained above, evidence is needed to support the conclusion that investment in Consolidated Industries is favorable. The author should confirm that new homes are well sold, heating oil will be used in these new homes, and Consolidated Industries is the best choice for most of the new homes before making the investment recommendation.