When things start to go wrong in the financial markets, when someone is hurting, hedge funds often get the blame.

That's the case now, after the big increase in energy prices. While the price of oil has been driven up by concerns over possible supply disruptions in Russia, Venezuela and elsewhere, hedge funds are being accused of exacerbating the run-up.

In several interviews this year, Saudi Arabia's foreign affairs adviser, Adel Al-Jubeir, has said that "massive speculation" by hedge funds was keeping oil prices elevated. Nymex crude oil futures have climbed 45% this year to more than $47 a barrel.

Since hedge funds can engage in complex trading strategies and are secretive and largely unregulated, they're often a convenient whipping boy. In 1998, for example, they were accused of playing a pivotal role in the Asian financial crisis. And during the bear market of 2001 and 2002, hedge funds

were criticized for fueling the declines by shorting stocks and corporate bonds.

"They've been scapegoats forever," said George Van, chairman and founder of Van Hedge Fund Advisors.

In reality, it's hard to know how much hedge funds have contributed to previous market declines or how much they're fueling the rise in oil today.

"It's impossible to quantify," said Van. "It would be disingenuous to say hedge funds haven't contributed to it, but it would be uninformed to say that hedge funds are the primary contributors."

While Saudi Arabia has said there is ample oil supply, analysts and investors worry there's not enough spare capacity to make up for spikes in demand or supply disruptions. The underlying reason behind the increase in oil has not been speculation but very real concerns about a tight supply-and-demand situation.

In any event, Van said hedge funds aren't doing anything that large investment banks like

Banc of America

(BAC) - Get Report

,

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MWD)

aren't doing. "The

proprietary desks of a lot of investment banks are hedge funds in disguise, basically," he said. "Because these banks don't talk about what they do, they fly under the radar, but the volume of what they do is staggering."

Charles Gradante, managing principal at the Hennessee Group, said he doesn't believe hedge funds are influencing the price of oil "to any great degree" and said traders in the pits of the New York Mercantile Exchange are having as much impact as anyone.

"It's bunk," he said. "For the most part, hedge funds are in the cash market, not the futures market."

Data from the Commodity Futures Trading Commission show that speculators have actually been decreasing their net long crude oil futures positions in recent weeks. In the week ended Aug. 10, net long positions fell to 36,303 from 40,299 a week earlier. This is down from late June, when net long positions hit 65,287, and well below March's level of 82,451.

Analysts say these speculators aren't hedge funds per se but commodities trading advisers, or CTAs, which are regulated by the CFTC. Still, the distinction between CTAs and hedge funds is somewhat nebulous.

Meanwhile, some observers note that hedge funds haven't profited significantly from the run-up in energy prices recently. The Van Global Hedge Fund Index lost 0.9% net of fees in July, although that did beat a loss of 3.4% for the

S&P 500

. Three of Van's four broad global strategy group indices were negative last month, with the Long/Short Equity Group Index down 2.1%, its worst showing since September 2002.

For the year, the Van Hedge Fund index is up 1.3% net of fees, compared with a 2.7% loss for the S&P 500.

With about 7,000 hedge funds in the U.S. managing nearly a trillion dollars of assets, it's easy to understand why Saudi officials think the industry has so much influence. But even if they're right, Pimco's bond guru Bill Gross suggests it won't last.

Greed, intense competition and excessive fees in the hedge fund world will "eventually reduce the product's average investment return to something approaching mediocrity," Gross wrote in a missive about the demise of the hedge fund craze. "Mediocrity rarely sells on Wall Street."