Oil prices are the one commodity cost that almost every investor and businessperson keeps a constant eye on. The ramifications of the cost of a barrel of oil ripple through and affect everything from the transportation, production, and general overhead costs that almost all businesses have to contend with… to more sweeping industry-specific changes like dictating what kinds of cars the auto industry needs to manufacture or what shipping and logistics companies need to charge for their services.

Each of these, in turn, has a cascade effect that ends up impacting almost every business sector in bigger or smaller ways. And since 2000, either due to costs or regulations, most businesses have been looking to either move into or take advantage of green technologies as an alternative.

So when the price of oil cratered in 2014 from around $125 a barrel to under $60 a barrel—as low as it had dropped during the depths of the Great Recession in 2008—many people wondered immediately if cheap oil would put a serious dent in the expansion of the so-called green economy… one built around alternative energy sources that were suddenly far more expensive than oil.

A 2014 article in The Independent, for example, claimed that cheap oil would completely destroy the burgeoning green revolution.

When the price of oil stayed low, and even continued to plummet into 2016, the reduction in fossil fuel energy costs seemed sure to have a significant and lasting impact on green energy producers.

In fact, the expansion of green energy sources themselves may have much to do with the dip in oil prices. Every new solar or wind project has the effect of reducing some element of demand for fossil fuels, freeing up supply and driving down prices.

Of course, there are a number of other factors involved, from the hands-off production strategy OPEC nations suddenly decided to adopt… to a reduction in demand coming from China… to improved production and efficiency in the United States, the world’s largest consumer of petroleum.

The financial viability of green energy projects like solar and wind is challenged when fossil fuel costs drop. Can the green economy survive consistently low oil prices for the foreseeable future?

The Energy Economy Is More Complicated Than It First Appears

Falling oil prices have some unexpectedly green effects in and of themselves. Newer, more expensive extraction and production processes have become financially implausible at current prices—Goldman Sachs estimated in December of 2014 that around $1 trillion worth of energy project investments were at risk as oil companies scrambled to shelve shale-gas extraction projects and other expensive recovery efforts. Investment in the oil industry overall has also fallen off a cliff, reducing the resources available to prospect or research new extraction technologies.

And despite the sudden challenge of cheap oil, green energy producers already have a foot in the door and won’t simply fold up their tents and leave. Placed in a position of having to defend their markets, there’s some hope that competition from cheap oil will force them to improve their own technologies and production methods to make them more viable. Since the cost of wind and sunlight is fixed, that will put green energy producers in an extremely attractive position once oil rebounds.

One example of this is Solar City’s new Gigafactory in Buffalo, a 3-year, $750 million investment in solar panel production technology that began turning out new panels in September 2017. With the more efficient panels and streamlined production process, Solar City aims to drop the cost per watt by more than $.30. That’s on top of an already dramatic decrease of almost 81 percent for solar overall between 2010 and 2017.

Wind energy costs were down by 63 percent over the same period. Although currently, neither are directly competitive with oil for a variety of reasons, the dramatic improvements in technologies continue to make them attractive alternatives.

In fact, even as oil prices were plummeting in 2014, investment in clean energy surged to beat expectations according to Bloomberg. Investment jumped 16 percent year over year. The stability and returns of green energy investments stood in marked contrast to the volatility of oil.

Hidden Costs To Oil Are Becoming Factors In the Decision to Go Green 

The growing global recognition of another, once-hidden, cost of oil is also a factor that will buoy the green economy: global climate change spurred all but three signatories of the United Nations Framework Convention on Climate Change to enter into the Paris Agreement in 2016 targeting dramatic reduction in greenhouse gas emissions, primarily through divestment in fossil fuels. That the agreement was still passed overwhelmingly even two years into a stretch of low oil prices speaks to other motivations for adopting green energy sources that go beyond the cost of a barrel of oil.

And despite the momentary dip in oil prices, one thing almost everyone agrees on is that they will rise again at some point in time. Despite improvements in extraction efficiency, no serious scientists disagree that there is some finite amount of oil that can be recovered—although there are debates about when and how peak oil will be reached, it is assuredly going to happen at some point. Green energy, on the other hand, has no similar roadblocks ahead, making it a solid investment regardless of oil price fluctuations.

Green Energy Has a Bright Future Despite Low Oil Prices

So far, the answer to whether or not the green economy can continue to survive cheap oil appears to be a solid yes. Despite oil prices that have been under $60 a barrel for nearly three years straight, solar and other alternative energy sectors have been pushing ahead without pause.

Recent news that China plans to phase out any internal-combustion propelled vehicles—which consume around 60 percent of fossil fuel production—carves out a solid future for electric-powered vehicles regardless of oil prices.

And more stringent efficiency standards in almost every major oil-consuming country has been driving down transportation consumption of fossil fuels for years. In the United States, oil consumption was lower in 2014 than it was in 2000.

There is a cascade effect from those decisions that will boost battery and electric motor manufacturers along with the vehicle makers themselves. As these investments pile up, it will only serve to make the green economy more robust and self-sustaining even in the face of reduced oil prices.

Green isn’t going anywhere in the modern world irrespective of oil prices and the green economy continues to be the economy of the future.