Drivers working in Uber Technologies Inc. and Lyft Inc. are feeling the pressure as gas prices in the U.S go up to an all-time high due to the Ukraine war.
What’s the matter?
According to Phillipe Jean, a driver based out of Easton, Pennsylvania, the fuel cost had gone up to 60% of the take-home pay, which was 10% when he started working rideshare app four years back.
As per Bloomberg News, as Russia’s attack on Ukraine intensifies, gas prices have gone up dramatically. U.S. lawmakers’ move to bar Russian oil imports into the country on Monday for a crackdown on crude from the country saw the biggest swing in crude oil price in a single day as a barrel of Brent crude touched nearly $140.
GasBuddy, an app that helps users save money on gas, shows that the last seven days saw the highest rise in prices leading to more than 49 cents increase in the previous week. This was the highest increase after the 2005 Katrina hurricane. Gas surpassed the all-time high of $4.10 a gallon on Monday.
The price increase makes many Uber and Lyft wonder whether it is worth having rideshare as a side hustle. These types of second thoughts have posed a challenge for the recovery of Uber and Lyft post-pandemic where there are not enough drivers to meet the resurgent demand from customers.
The imbalance has resulted in higher fares and waiting times for customers. However, the supply has improved after companies started giving out bonuses and incentives last year to lure back the drivers on duty, as per Peter Martin, the analyst with YiptiData. The week ending Feb 27 saw the average weekly charge per mile to be 18% higher than the previous year in January 2021, when the driver shortage pricing wasn’t there.
The surge in gas prices at the pump came as a shocker, especially after workers were heading back to offices after lifting Covid restrictions. Uber on Monday had raised its profitability outlook for the current quarter, citing increased demand from passengers.
It is not clear whether the higher price of gas is passed on to the customers or not. However, Uber said that for every 20% increase in gas price, customers would have to pay 1% extra ride fare to keep the driver and Uber’s earnings consistent.
An Uber spokesman said that the Uber platform works only if it works for the drivers. Therefore, the company will continue to monitor the gas prices and listen to the drivers in the coming weeks.
Both Uber and Lyft have tied up with GetUpside. This rewards platform offers 25 cents in cashback after purchasing every gallon from participating gas stations. This is done to provide immediate relief to the drivers.
