The following appeared in a letter from a firm providing investment advice for a client.Most homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating. Last heating season that

In his letter, the writer recommended investment in Consolidated Industries, a major home heating oil retailer, based on current meteorological prediction of a possibly severer winter in the northeastern United States. To substantiate his argument, the writer cited that the targeted region experienced a long time of below-normal temperature heating season in last year. In addition to this trend, the write noted that the major heating energy source utilized in this region is oil, and because there has been a significant increase in the number of local housing, it is reasonable to conclude that oil consumption will be dramatically elevated in the next couple years. In this case, the investment made today will be a provident choice. Although such argument looks coherent at first glance, a close scrutiny easily reveals that it is actually rife with loopholes and such a recommendation from the writer should not be taken before several questions can be answered.

The cardinal premise that the writer's recommendation builds upon is that the oil is the major energy source for the local in the northeastern United States, and will be the preeminent source in the next few years. This assumption lacks scientific underpinning and is susceptible to further investigation. It is highly likely that, instead of using heating oil, the locals in the described area will switch to use alternatives such as solar energy or natural gas - both energy, especially natural gas, have been prevalently harnessed and utilized in the heating systems around the world. The writer presumptuously concluded that the heating oil will be continually favoured by the locals of the northeastern Americans and neglected potentials for alternative energy. Perhaps the writer should first conduct a survey in the neighbourhood or interview the local governors in determining what is the most likely dominant energy for heating purpose before proposing investment in a oil retailing company.

Another problem with the wrtier's argument is that the writer assumes that energy utilization level will increase due to newly constructed housing in the neighbourhood. Unfortunately, no detailed statistics nor explanations have been provided to illustrate what these homes are used for. It could be a good indication of increased immigrants from other areas; similarly, it can also imply that the locals have been wealthy enough to support a second or third house for personal usage or investment purposes. The writer did not mention nor cited any convincing numbers to demonstrate how the population in the local area has been linked to these newly constructed houses. In this case, the writer's premise that the energy consumption for heating system will balloon due to increased housing is invalid.

Last but not least, although the weather forecast has predicted a unfavourable pattern in the next couple years, such a prediction may not be completely accurate. Global warming has created many problems on the earth resulting in many unpredicable meteorological changes that scientists are still trying to figure out. In this case, a mere trend presented by the weather forecaster is not convincing enough to say that the weather will be as bad in the next couple years.

Overall, the writer of the letter failed to use a scientific way to prove that the oil will be the dominant source for the next couple years, nor did he make connections between the population and local housing. Thus the recommendation is not valid enough to be pursue.