From the ever-expanding “This Isn’t Price Gouging” Department, the New York Post reports:
Passengers are blasting the Uber car-service app for its “surge’’-pricing scheme, which kicked in during the city’s first snowstorm of the season — in one case pricing a short trip across town at a whopping $132.
But in Boston, blogger Jessica Gioglio — who bills herself as “The Savvy Bostonian” — shelled out $91 for a 3.18-mile, 16-minute trip from Beantown’s Back Bay to Central Square.
Posting a screenshot of her e-mail receipt, she called the fare “price-gouging” and said, “I’m really disappointed in u guys.”
Uber, much maligned by regulatory fiends and taxi cab sympathizers, has really upset the taxi cabal in many major U.S. cities. Namely by providing better, more convenient service for a more premium price.
Unlike taxicabs, whose drivers can usually only impose a change in prices when allowed by decree from the government (i.e. during a snowstorm, or when gas prices are unusually high), Uber can raise prices to reflect market demand. And users are clearly made aware of this before they agree to take an Uber, as seen below.
The Uber situation in Brooklyn right now is not particularly great pic.twitter.com/OAABfMhDfJ
— Bryan Bonczek (@itsbonczek) December 15, 2013
The Post continues:
The app’s practice of surge pricing is actually designed to help consumers, Uber spokeswoman Nairi Hourdajian insisted Sunday. The higher rates “get more cars on the road quickly when demand outstrips supply, helping to guarantee that New Yorkers can get a ride when and where they want,” she said.
“As soon as demand falls or supply increases sufficiently, prices return to normal.”
Uber cars and their drivers, like everything else, are a scarce resource with alternate uses. Uber is right to raise prices to incentivize more drivers to work than to accept private contracts (as many Uber drivers do in Washington), hunker down with their family, or go out and get supplies for their homes. Just like laws prohibiting so-called “price gouging” during a storm serve as a disincentive for shop owners to stay open, the rules that govern taxi cabs often result in less taxis being available.
Which, in turn, might cause Uber’s demand to surge even higher than it normally would if taxis had greater flexibility to charge market rates.