It may be like locking the barn door after the horse has escaped, but Congress’ approval of a bill that includes a provision regulating energy trading is an example of how government can help control escalating energy costs. Though demand for oil has been up in recent years, mostly from developing nations such as India and China, the recent spikes in oil prices have been as much tied to speculation and the weakness of the U.S. dollar as to supplies.

The Farm Bill, which was sustained with a presidential veto override last week, includes a provision that closes the so-called Enron loophole. Sen. Olympia Snowe, who long championed closing the loophole, voted in favor the bill. Sen. Susan Collins voted against the Farm Bill, citing what she called its wasteful agricultural subsidies. Reps. Mike Michaud and Tom Allen voted in favor of the measure.

In 2000, the infamous energy trading company Enron sought and won exemption from federal oversight for energy commodity trading. Federal regulatory bodies, in their monitoring and intervention, prevent the price of commodities from being artificially inflated beyond real market dynamics. The loophole allowed excessive speculation and energy price manipulation, according to advocates for regulation.

Specifically, the Farm Bill provision empowers the federal Commodity Futures Trading Commission to have closer oversight of electronically managed energy markets. Enron allegedly manipulated those markets, according to a report in the Modesto (Calif.) Bee newspaper, during California’s 2000-01 energy crisis which resulted in electricity shortages.

Some of the details of the energy speculation measure include giving the CFTC the power to determine whether energy futures contracts have “price discovery” provisions, and to prevent buyers from “cornering the market” by buying too many contracts.

When the economy is humming along, as it did in the mid- and late-1990s, elected officials are loathe to create new regulations, gatekeepers and hurdles for business. But when the economy stumbles and staggers, and the finger of blame is pointed at massive mortgage failures and out-of-control energy costs, government is exhorted to drop the “hands-off” approach. Rather than respond to this ever-swinging pendulum, elected officials should work harder to find a justifiable level of regulation in good times and bad.

In a related move, the Senate voted last week to have the federal government stop buying 70,000 barrels of oil per day to add to the nation’s strategic energy reserve, thereby easing demand, if only slightly, from the 21 million barrels the U.S. consumes daily. And President Bush, on a visit to Saudi Arabia, unsuccessfully asked that country to increase oil production.

These moves, along with closing the Enron loophole, are small steps, but at least they suggest government is aware of the scope of the energy crisis.