Remember when taking an Uber was a cost-effective way to get around town? Well, the resurgence of the conflict in Eastern Europe between Ukraine and Russia has served as a threat to that situation, while once again highlighting the butterfly effect that is occurring in the world. A conflict 5,687 miles away changes the price of fuel in the U.S., and there’s not much American citizens can do about it!
Well, it is a supply and demand situation, so if we are able to open up supply, that would change the dynamics of the oil situation. But that is topic for another day.
Now, coming back to Uber, we see that the global ride-sharing firm is having to get serious about the fuel costs with regard to their drivers. Remember that drivers have to bear the costs of each trip. They have to account for the mileage added to their vehicles, the cost of the fuel, repairs and maintenance due to the regular operations, and maybe cleaning, if someone were to barf in the vehicle.
Adding more costs to an Uber business would create constraints for the drivers and make it where it is not feasible.
Fuel Taxes Have Grown In Europe and US Customers Bear Costs in A Different Light
New fuel taxes have become the new normal in European countries, and in response, Uber is implementing a temporary fuel surcharge. Uber’s surcharges range from 45 cents for rides and 35 cents for food orders, directed at delivery drivers, a target group greatly affected by the situation.
In addition, along with the changes introduced, it is important to note that Uber has joined companies such as Google in making donations in support of communities affected by the war in Ukraine.
Sanctions against Russia have been used as a measure to condemn Russia’s invasion of Ukraine, however these sanctions do not only affect Russia but also the countries that impose them.
A few would point out that it has not been this high since 2005, the year of Hurricane Katrina, and this is all a result of the blockade imposed on Russia.
The price of a gallon of fuel has had high points in 1980, 1990, 2000 (for a few months), 2006, 2008, 2010 -2014, 2018, and now we are back to relatively high levels.
The Price to Travel in An Intertwined Global World
The price of fuel is $4.17 per gallon, making it unaffordable. The situation becomes even more troubling as prices are not expected to come down anytime soon.
This surge in gas and fuel prices, combined with high demand, may cause inflation and contribute to further price increases. As the ban on Russia, the world’s largest oil exporter, becomes a fact, hopes that the change will be short-lived are fading.
While this surcharge may be seen as a short-term relief measure, it is an immediate policy responding to the crisis and, of course, its prevalence is by no means assured. Time will tell if the fuel price change will have an impact on the number of Uber drivers, its riders, and the company as a whole.