The Russian war in Ukraine has pushed gas prices to record levels, and Uber and Lyft drivers who need to pay even more out of pocket to do their job feel the pinch.
Russia is one of the world’s largest crude oil producers, so when the United States announced it would no longer be importing Russian oil, which makes up about 8% of total U.S. oil imports, global prices shot through the roof. Add concerns about other stinging sanctions imposed by the U.S. and Western powers, and oil prices skyrocketed.
While oil prices have moderated some as the initial panic of a global energy crunch abates, they are still sitting at higher levels than last year. West Texas Intermediate, the U.S. oil benchmark, peaked at about $130, a considerable increase from the $88 level it was at during the start of this year.
Gas prices have been record-breaking. The price for a gallon is approximately $4.30, up from $3.51 a month ago and the $2.87 it cost last year.
Mory, a Washington, D.C.-based Uber driver, said he had changed his driving habits “a lot” because of the surging gas prices. He told the Washington Examiner he had to switch from driving full-time to driving part-time and get another side job to make ends meet.
“Uber doesn’t think about gas prices,” he said, adding that the situation is “very terrible” for him and other drivers.
In light of the higher prices, Uber is trying to retain workers by offering a temporary gasoline surcharge added to the fares and goes directly to drivers such as Mory to offset the increased costs.
On March 16, Uber customers began paying a surcharge of either $0.45 or $0.55 on each trip with the ride-hailing service. For the company’s food delivery service, Uber Eats, customers will pay either $0.35 or $0.45 on each order, depending upon location.
“We know that prices have been going up across the economy, so we’ve done our best to help drivers and couriers without placing too much additional burden on consumers,” the company said. “Over the coming weeks, we plan to listen closely to feedback from consumers, couriers, and drivers. We’ll also continue to track gas price movements to determine if we need to make additional changes.”
The gas surcharge program has a sunset after 60 days. However, Uber said it would reassess the situation at that time.
Not to be outdone, Lyft, the second-largest ride-share company, quickly followed suit and announced that it would add a $0.55 fuel surcharge on each ride that goes directly to drivers. The company also noted that it offers Lyft Direct, a debit card designed for drivers that provides 1% cash back on gas and grocery purchases and 4% cash back on dining.
Both Uber and Lyft have previously launched a feature that can help get drivers up to $0.25 per gallon in cash back through a partnership with GetUpside.
Still, even with the added fuel surcharges, some drivers say it isn’t enough and doesn’t include long rides since those get charged a flat fee.
Rideshare Drivers United is a California-based group that supports driver organization and advocates higher wages for drivers. It recently started a petition centered on the higher fuel costs calling for Uber and Lyft to boost wages and provide drivers an additional differential as gas prices continue to rise.
“We’re in a crisis,” Nicole Moore, a group member, told the Washington Examiner.
Moore explained that the $0.55 surcharge doesn’t go far for drivers who pick up passengers for longer trips because they burn far more gas than short rides.
“It’s meaningless, I mean, really, it doesn’t even get close to what is necessary. A real gas price differential would be per mile, not per ride,” she said.
Oscar, another Uber driver who works around the nation’s capital and has shuttled passengers for the company for seven years, said that if gas prices keep trending upward and Uber doesn’t boost wages, he will have to start searching for a new job.
“It’s a big difference, a very big difference because we run on gas all the time, and we’re picking [up] the same amount of people, but the gas prices have increased,” he said. “So, I think there should be some increase in the [Uber] prices, at least to take care of the increase in the gas.”
It is uncertain when gas prices will recede, and much of it depends on what happens 5,000 miles away in Ukraine and oil-producing countries. There is some hope among investors that oil giants such as the United Arab Emirates and Saudi Arabia will increase production to make up for the Russian losses, which is why oil prices have fallen off from their recent peak.
There have also been COVID-19 outbreaks in China, and the government utilizes strict zero-COVID-19 policies. When there is an outbreak, China is fine with closing down entire cities and temporarily shuttering factories. If the outbreaks worsen, it will reduce demand, easing oil prices further and resulting in lower prices at the pump for drivers.
“I think people are cautiously optimistic about the Ukrainian crisis,” said Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program. “A lot of this pricing out was risk-based in essence.”
