The United States Oil Fund (NYSEArca: USO) and the Energy Select Sector SPDR (NYSEArca: XLE) make for predictable victims during a bear market for oil.

That has indeed been the case as USO is off 17.8% over the past month while XLE, the largest equity-based energy ETF, is lower by 8.4% over the same period. However, oil weakness is hampering some alternative energy ETFs, including the Guggenheim Solar ETF (NYSEArca: TAN), which has tumbled 5.5% over the past month.

Conventional wisdom dictates that as oil rises, solar stocks benefit because those high oil prices shine a light on the benefits of alternative energy sources, including solar. The reverse is true as oil falls. As a result of oil’s weakness, short sellers are piling into solar stocks and TAN.

“Far from seeing a lift, bearish trading activity is on the rise in this ETF. Interactive Brokers says that short-sellers, who borrow shares in hopes of selling shares and then buying back later after prices fall, are paying 27% more in the lending market than two weeks ago. That makes TAN hard to borrow in the parlance of Wall Street trading desks, meaning that shorting it is difficult and expensive,” reports Chris Dieterich for Barron’s.

Underscoring the impact oil prices have on solar stocks and ETFs is TAN’s recent bout of weakness comes after the Obama Administration called for tougher rules on greenhouse gas emissions and a greater target for renewables. [White House Doesn’t Lift Alt Energy ETFs]

Last Monday, President Obama announced a revised Clean Power Plan that will increase the required cuts in carbon emissions from the power sector to 32% from 2005 levels by 2030, up from the 30% requirement in the original draft, reports Everett Rosenfeld for CNBC.

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