I’d wager that virtually every politician at least at the state level and above — and even too large counties and cities — knows and understands this completely.
They may not understand that "price gouging" is a non-concept. But they do understand that it’s political gold and they’re very bullish on political gold. So don’t expect to be hearing clarity on the topic any time soon.
I suppose we can fault the average guy (as usual) for not really thinking through things very well at all, which is probably unlikely to change. As soon as the general public realizes they’ve been scammed (again) with "price-gouging" hysteria (clue: hysterias are generally scams) the lay of the economic and political landscape will be such that there will exist new phenomena possessing sufficiently complex interactions for the cunning (politicians) to exploit the clue deficient (general public). And time marches on.
Maybe they should just get it over with repeal the law of supply and demand. There are places where that’s the case and indeed, it completely solves the "gouging" problem. At the extreme end, the disequilibrium gets resolved in ways other than via price action, like, for instance, enough people starve to death such that there are no longer shortages at the fiat price the authorities calculate will maximize their political gold.
The best way to understand "price gouging" without any need for knowledge of economics is to imagine a situation in which you’d pay $1,000 for a simple bottle of water. Can you imagine a situation where you’d pay $1,000 for a bottle of water that today, you’d balk for $3? And in such dire circumstances, do you expect there might be others willing to pay that too? And if the price is instead held to $3 by force, what do you think are your chances for getting any at any price? But they’ll "ration" it, you protest. Yea, and those ill prepared will get their friends and wives and sons and daughters to go buy their "ration," until the effect is the same. "Gouging" solved (by force: the cause), ushering in its clear effect: hoarding.
Rationing, too, is a non-concept, because that’s exactly what free-markets and prices do. They precisely regulate and ration supply. This, in turn, has the side benefit of educating people on what measures they ought to have in place to be prepared for emergencies. Fiat prices serve only to reward non-preparation. It’s de-evolutionary, from a human perspective. In evolutionary terms, we’re sheltering people from the consequences of their bad choices and mistakes, which is essentially the same as paying them to screw up. Guess what happens when you pay people to screw up? You can’t escape economics: you get more screw ups.