NOTEBOOK

Oil industry is changing, but will it be fast enough?

In the week since OPEC and its partners extended their production cuts through the end of next year, a lot of people in Houston have focused on oil prices, hoping they might soon cross the $60-a-barrel mark. Most probably overlooked a report from the Energy Department that came out the day after the OPEC decision.

That report tracked solar panel shipments. It not only showed that shipments have climbed throughout the year, but that the cost of those panels continues to drop. Through the first nine months of the year, the cost per watt has averaged 60 cents, down 17 percent from 72 cents in 2016 and nearly 50 percent from $1.15 five years ago. Most analysts expect the cost to keep falling.

These figures are another reminder that as the oil recovery nears its second year, the industry faces a far different landscape than the go-go days before the bust. The world still needs energy, but increasingly it wants that energy to be cleaner.

The last month or so has brought a number of related developments. Electric car sales, while still a tiny share of the global auto market, surged more than 60 percent in the third quarter, reaching a record, Bloomberg New Energy Finance reported. Swiss financial services company UBS predicted that one in six cars sold by 2025 will be electric. France and the United Kingdom said they would ban sales of new gasoline and diesel-burning cars by 2040, and a key California lawmaker is drafting legislation that would do the same in the most populous U.S. state.

The oil industry seems to be getting it. After years of deriding climate science and the broad consensus that fossil fuels accelerate global warming, oil companies are positioning themselves for the low-carbon market. Exxon Mobil, for example, is spending $1 billion a year on alternative energy research.

Oil majors also are increasing investments in natural gas, the cleanestburning fossil fuel, betting it will provide the bridge to the low-carbon future. Last month, for example, France’s Total spent $1.5 billion to buy the LNG assets of another French company, Engie.

The switch to natural gas from coal is a big reason greenhouse gas emissions from power generation have fallen 25 percent over the past decade or so.

Oil and gas companies also are recognizing that’s not enough. Last week, as part of an initiative by the American Petroleum Institute trade group, many of the nation’s biggest oil companies pledged to cut emissions of methane, the main component of natural gas and a potent greenhouse gas.

While the initiative was dismissed by environmental groups as a public relations ploy, it at least showed that the industry was paying attention. Methane emissions from drilling, pipeline leaks and other sources are viewed as the Achilles’ heel of natural gas, which until methane moved into the public consciousness enjoyed a preferred position. If natural gas becomes just another fossil fuel, the oil industry’s bet on it may not pay off as handsomely.

Certainly, you can make the case that the nation’s biggest oil and gas companies acknowledging methane emissions as a problem deserving of solutions is another sign of how much the landscape has changed since the oil bust. Who knows how long gasoline will power cars, or when the world will no longer need or want fossil fuels?

But one thing is certain. In the coming years, the industry will need to focus its legendary capacity for innovation on more than just finding ways to get more oil and gas from the ground.

Who knows how long gasoline will power cars, or when the world will no longer need or want fossil fuels?