Lyft and Uber Impose Temporary Surcharges to Account for Gas Prices
High gas prices across the U.S. are more than an inconvenience. For the estimated 5 percent of Americans who have earned money driving for a ride-hailing app like Uber and Lyft, fuel costs are eating into their earnings. To make up for it, Uber and Lyft have imposed a temporary surcharge for consumers.
Here's the reasoning behind the move that puts costs on consumers. How much the surcharge will be, and how long could it last?
Lyft and Uber adding surcharge to rides — consumers will compensate drivers for high fuel costs
The average gallon of gas in the U.S. costs $4.316 as of March 15. Costs at the pump have been surging particularly high since Russia began invading and forcing war upon Ukraine. Oil prices have steadied off this week, falling from about $123 per barrel to less than $110. Granted, the actual cost to produce and distribute oil is only half of what contributes to pump prices, with other influences including geopolitical factors and projected supply.
All things considered, Lyft Inc. (LYFT) and Uber Technologies Inc. (UBER) drivers have been paying out of pocket for increased fuel expenses. To compensate drivers for these increased expenses, both companies are imposing a temporary surcharge for consumers to pay.
How much is the new Lyft and Uber surcharge?
Lyft announced its surcharge this week, but hasn’t specified how much passengers will pay. Uber’s announcement came last week, solidifying a surcharge of $0.45–$0.55 per Uber trip ride and $0.35–$0.45 per UberEats delivery.
Rideshare companies have increased fares for consumers by as much as 50 percent since the COVID-9 pandemic, mostly to avoid state-imposed minimum hourly payments to gig workers.
Expect to pay more for at least two months.
Uber says its temporary surcharge will last for at least two months. Lyft hasn't specified how long its surcharge will last. The companies are fighting to keep their independently employed workforce in a competitive market, with workers seeking higher pay amid a period of hyperinflation.
As for when gas prices will go down, that’s a prediction no one feels comfortable making just yet.
Surcharge to go straight to drivers — tipping is still expected.
Both Lyft and Uber have been clear that 100 percent of the surcharge will go to the driver to compensate them for increased fuel costs. The average Uber driver completes 7.5 trips per day, which would equate to upwards of $4.12 extra per day for gas. That isn't enough to cover a gallon of gas in most cases, and the average Uber driver drives for about 3.5 hours consistently over the course of their shift.
With gas costs up nearly 67 percent over the last year, the surcharge may not be enough. For drivers, tips could be the tipping point for whether or not driving for Uber or Lyft is worthwhile.
Frankly, for consumers hoping to avoid the wrath of high fuel costs, fully electric vehicles and public transportation may be the only solutions.