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If oil price goes down, demand for renewables goes down.

Lower demand for renewables means... Higher prices? Less output of actual renewable products like solar panels? Less demand for new wind turbines?

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If the price of oil drops by 20% the demand for oil from marginal sources like tar sands could go down by 70%, since they were barely profitable when prices were 20% higher. On the other hand, oil (or natural gas) prices are only a fraction of the total cost of electricity or gas/diesel, so demand for renewables will probably not drop by too much. In fact, since a sudden shock in the price of oil could kill off a lot of marginal producers, the long term average price of oil could increase from previous expectations. This would make renewables even more attractive. Another factor to consider is that if marginal oil producers die out the price of labor will decrease in many places. This will also serve to make the price of solar lower, since labor costs are a decent fraction of total costs. There are a lot of cascading effects from a change in the price of a commodity as big and important as oil.

Another factor is that oil seems to be much more vulnerable to volatility than renewables. I haven't read anything about renewable sources needing continue production when it's unprofitable to do so because the cost of turning production on or off is so high.

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