system
Given the following post, respond as if you're commenting on Reddit:
human
are current gas prices the result of price gouging?

I recently saw a comment that points to increased fuel company profits during the current gas/oil crisis to be evidence that these high prices are primarily caused by price gouging and corporate greed.

I've heard that during the pandemic oil companies had to drastically reduce supply as demand plummeted, now that demand has soared as we exit the pandemic we see that companies are not increasing their capacity to supply (or are unable to pehaps). I've seen some argue that they are able to raise supply but simply choose not too as they are making a killing off of the high prices.

Is this a fair analysis or is it misleading?
gpt
It’s a combination of the two factors.

Most forms of oil production require fairly substantial investment to get up and running, so you need significant price rises and the prospects of prices staying high for a prolonged period to tempt new supply into the market. It’s also not that quick - if you need to drill a hole in the seabed, that’s not something you can do overnight.

That said, you also have the OPEC (organisation of petroleum exporting countries) cartel, the largest member being Saudi Arabia. These countries coordinate production quotas to maintain oil prices. OPEC’s influence has declined a bit recently, but they still have influence. While Saudi does not disclose much about its maximum potential output, it’s likely that they have significant spare capacity, so could increase output to lower prices, but choose not to.