Gouging may be good for a day (assuming there weren't other good transport options, which is simply untrue in SF), but it sucks as an acquisition method.

My experience with Uber was essentially: (1) "Hey, it sounds great, but that's a bit pricey. It can't really be worth it, can it?" (2) Decided to take someone to dinner via Uber because it was more impressive than a cab. (3) "Hey, this is actually pretty cool and totally worth it." (4) I'm now a repeat customer, even when traveling alone.

In my eyes, the key is that they need to find a step (2) for a more general case. Having a day where there are no cabs might be a small push, but having a day where there are no cabs and Uber is the price you would have paid anyway is absolutely killer.

Short answer: Long-term thinking is better for them than short-term thinking.

There is competition. People might take buses, or trollies, or BART. They could also walk, carpool or hitchhike.

Customer acquisition and advertisement.

It's not a long term market pricing strategy. It's a PR maneuver, and it's a damn smart one. There will be a ton of interest in this story, especially for the 'victims' of the strike - the actual customers. Uber is using this situation to gain awareness in the minds of their target market.

I hadn't heard of this business until now (admittedly I am not in the correct location). Now I have.