When oil hit $147 a barrel this summer, hedge funds were feeling the heat as big media and big government pointed to the speculators as the real culprit in the price run-ups. The only people who weren’t complaining about oil hedge-fund traders, it seemed, were investors who held shares in clean-energy companies. But times have changed…

The higher oil rose, the more valuable their green portfolio grew. Making money in alternative energy was a fait accompli.

Well, the wheel has turned, pretty quickly in fact, so now the green contingent can blame those dastardly hedge funds for their own reversal of fortune.

The credit crunch has forced many hedge funds to get out of the oil trading business. While it’s difficult to say exactly how much oil inventory hedge funds controlled in the heydays of 2008, today their influence has waned along with tighter credit.

When we talk about oil and the laws of supply and demand, gas-guzzling SUVs, the Chinese and Arab sheiks are trotted out as the usual suspects. And of course, this is largely true.

But they don’t cause oil prices to spike overnight. That’s the job of hedge funds. Investors see oil bolt, and their knee-jerk reaction is that alternative energy is a sure thing. Next thing you know, there’s a stampede into green.

After all, the math is easy. The more expensive fossil fuels, the faster the ROI for alternative energy.

The sentiment is easy to play as well. The more volatile oil prices, the safer green becomes.

Who would’ve thought, however, that it would be a credit crunch that brings the green contingent to its knees?

With no cash to leverage, hedge funds are having extreme difficulty in oil arbitrage. In these dark, cashless days, hedge funds have only one thing to do with oil: sell, sell, sell.

Now the tight credit markets are hindering hedge funds from amassing oil inventories, removing a source of demand that has lifted prices to historic highs.

On Wednesday, light, sweet crude futures for December 2008 delivery fell $3.17, or 5.3%, to settle at $56.16 a barrel on the New York Mercantile Exchange – a far cry from betting on oil reaching $150.00

So if you’re tempted to go green, expand your due-diligence beyond mere consumption. Keep an eye on market liquidity. Once the hedge-fund crowd starts to suck it up again, you could be back in the business of green energy.