Greenpeace has produced a new report on the Koch brothers involvement in climate change debates, and Brad Plumer has written a post on the broader implications:

Greenpeace notes that between 2006 and 2009, the Koch brothers—along with Koch Industries and Koch family members—spent $37.9 million advocating on energy issues, behind only ExxonMobil and Chevron. One place where the Kochs have been extremely active in shaping the climate debate of late is in California. Flint Hills Resources, a subsidiary of Koch Industries, recently gave $1 million to the campaign to overturn California’s climate law by ballot initiative, and Koch-backed groups are working overtime to stir up opposition to the law.
By the way, the California debate is interesting because not all the oil companies are lined up alongside the Kochs. The big oil giants, such as ExxonMobil, BP, and Chevron, are all staying neutral. Shell actually opposes the repeal campaign. It’s mainly the mid-sized refiners—Koch Industries and Valero and Tesoro—that are fighting hardest to scrap the climate law. One possibility is that the major oil companies think they’ll be able to handle the new carbon restrictions better than their smaller competitors. The Koch brothers, at least, appear to agree. [Emphasis added.]

Brad understands the role of raising rival’s costs in competitive strategy, and that’s at least part of the story behind why firms like Shell back climate legislation that creates new subsidies for incumbent firms while raising barriers to entry.

As Phil Verleger explained back in 2006, constraints on refining capacity were a major driver of the enormous spike in gasoline prices that occurred in 2006-7:

What has happened is the environmental authorities—in California, it’s a state organization, in the rest of the country it’s EPA—have worked to get those components of gasoline that were particularly bad actors out of the product. One of the bad actors is benzene, which is a carcinogen, and another of the bad actors has been sulfur. Gasoline sold in other parts of the world tends to have a little more sulfur. The regulations are very stiff on the east coast. Here in the Rocky Mountains where I live, they’re a little more lax because the refineries just couldn’t meet the new standards in time. One way to increase gasoline supply is to relax those regulations, and for six months, that would increase supply and bring prices down. What’s happened over the last two years is crude oil’s been pulled up to seventy dollars a barrel by limited supply of refining and the need of some of these refiners for the crude oil we call ‘sweet,’ to produce a lot of gasoline without much work.

Yet as Verleger explains, many refiners have backed tough regulations:

What is not generally acknowledged is that the specifications for petroleum products have been negotiated almost in a conspiratorial fashion between oil refiners and [the] EPA. Economists for years have been trying to suggest that if EPA regulations had a little flexibility, and for example allowed gasoline to be sold that had a little more sulfur, but with a payment of a penalty, you could limit the price increases. But [the] EPA has resisted these rules and U.S. refiners who made the investment to produce the clean fuel are very outspoken about the fact that these rules should not be relaxed.

Any why would the refiners make this case?

They say “we have made the investments, we deserve to earn the profits.”

The refining industry was thus very profitable:

They’re making huge profits. Valero is the biggest U.S. refinery, and it has reported extremely large profits. Other companies, such as Sunoco, reported smaller profits, but in the second quarter with this big run-up in gasoline prices, they’re literally going to be making billions.

This is the framework we need to keep in mind when considering why one set of firms backs a regulation and why another opposes it.