This is the best analysis I've read about why gas prices are high:

The current increase in gas prices is mainly due to an increase in the cost of crude oil, which has doubled over the past two years to more than $70 a barrel. This is the first of four underlying reasons why the cost of gas has increased. OPEC manipulates the price of crude oil. OPEC member countries hold about 2/3 of the world's crude oil reserves, and provide about 40% of the world's crude oil. OPEC sets limits on the amount of crude oil its members may produce in order to keep the price of oil at a target level.

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A second reason why gas prices have increased, which is the most important factor for the long-term, is that demand for oil has been gradually increasing around the world. Demand for new cars has risen in China and India. As those countries purchase more oil from OPEC countries, the U.S. is forced to turn to other oil-exporting countries at higher cost. Even if the U.S. chose not to buy any oil from OPEC countries, it would still be affected by OPEC's changes in price or supply, since the countries that continued to purchase from OPEC would be affected by those swings and so would purchase more oil from non-OPEC countries, raising the cost of oil sold by those countries to the U.S. During the first quarter this year new car sales grew by 4.8 percent in the U.S. People in the U.S. continue to buy SUVs, which consume more gas than regular cars, while living increasingly farther away from their work in suburbs outside of the ever-growing megacities.

Third, environmental policies in the U.S. have kept costs associated with production, refining, formulas, transportation and storage of oil high. U.S. crude oil production dropped as reserves ran out, and environmentalists have prohibited new drilling in Alaska's ANWAR. Because of the influence of Iowa farmers, many refineries are still in the process of switching from the additive MTBE to ethanol , at dubious value and excessive cost. Some areas of the country, like California, experience higher gas prices than the rest of the country due to even more stringent gas formula requirements, as well as their distance from the Gulf of Mexico pipelines. U.S. oil refineries are operating at maximum capacity, because liberals and environmentalists have prevented any additional refineries from being built for decades. Gas prices skyrocketed after Hurricane Katrina took out 10-15% of oil refineries in the U.S. and interrupted pipelines from the Gulf of Mexico that fed the Midwest and the East Coast. Without additional refineries to take up the slack, any time there is a disruption affecting refineries, gas prices soar.

People I know, even extrememly intelligent people, are buying into the oil-companies-are-price-gouging mantra.

Profits are a good thing. They keep people employed and they get spent on good things like infrastructure and reasearch and development. Remember that if you outlaw the right to make money on a product, it will not be available for long.