Uber Capping Prices During Snowmageddon 2015

An anonymous reader writes that yesterday Uber announced a cap on surge pricing during the mammoth snow storm hitting the northeast this week; there will still be surge pricing, but it will be capped at 2.8 times the usual fares. The cap comes after an agreement struck between Uber and the New York City Attorney General’s office in January 2014 that required Uber to limit prices during “abnormal disruptions of the market”, including emergencies and natural disasters. Uber also announced a national policy for its price limits during those emergencies. ... While Uber plans to limit dynamic pricing during this storm, the company has had a bad history with emergency situations and surge pricing. In late 2012, Uber received criticism for raising fares during Hurricane Sandy. (The agreement with the NY AG came in part as a result of Hurricane Sandy backlash.)

Comments

So what will this accomplish?

[weloytty]

The purpose of the elastic pricing was to make sure that there was always a nice supply of drivers. Cap the prices, and you won't have as many drivers available to drive you around in the snow. Econ 101, right?

Re:So what will this accomplish?

[bws111]

Who still needs to eat? The billionaire owners of Uber?

Re:So what will this accomplish?

[ShanghaiBill]

if they actually want people to believe they are only trying to help.

They are a business, not a charity. So no one should expect them to be "only trying to help". Even if they wanted to contribute some profits to charity, helping some investment banker get to his job on Wall Street by subsidizing his fare, probably isn't the most worthy of causes.

Re:So what will this accomplish?

[Rich0]

Correct me if I'm wrong, but in normal operation on a busy night you can see Uber prices surge up to 500% or more. If you want to see anti-gouging laws implemented like they have in New Jersey, where gas stations and service providers are not allowed to increase their prices during a disaster situation, go ahead and support Uber's right to surge pricing whenever they want it.

What a surprise that during hurricane Sandy there were huge lines in NJ and it was impossible to buy gas there. Maybe if they allowed prices to float people would have reconsidered the importance of their trip, but anybody with a need to drive could pay the $20/gallon to drive, or at least easily obtain enough gas to drive to someplace where it was cheaper (you only need a few gallons to get to an area not impacted by the storm). Also, if prices were higher you'd see everybody with a tanker truck driving east to fill up and offering the gas for sale at a street stand, which would provide far more gas to the region.

Instead it worked a bit like the USSR. If you knew somebody you could go buy cheap gas from FEMA, and if not you either stood in line all day long, drove 150 miles yourself for gas, or went without.

Damn, nannies are hypocritical idiots

[A nonymous Coward]

They tax booze, tobacco, and anything fun, and raise tariffs, expressly to reduce demand. They subsidize whatever they want more of, to nudge people and to reward cronies.

Yet they think raising the minimum wage will increase the demand for low skill workers, they think wage and price controls will reduce demand and increase supply, they think capping surge pricing will increase supply and reduce demand, on and on the hypocrisy goes.

Just go away, nannies. Go away.

Re:Bad economics leads to bad policy

[bws111]

'They' don't want people on the roads at all. The last thing they want is someone dimwit who says 'for the right price I will ignore the travel bans'.

only trying to help?

[schlachter]

It's a company. They are not in the "only trying to help" business. What company has ever done that? They're in the grow market share and make money business...by filling a need in society and adhering to local laws when needed.

Re:only trying to help?

[LoyalOpposition]

Exactly my point. They are only trying to make money for themselves, and if exploiting a disaster make them more money, they will do that. Yet here we have people (like the OP) trying to claim that they are 'ensuring there are enough drivers'. Bullshit

Let me see...I can get out in this snow, go several extra blocks, pick up someone I don't know and drive them somewhere. I could get 2.8x. Or I could stay in next to this fire, drink this rum & coke, and call in 'sick' today. Screw it. Sorry, Uber--not available.

~Loyal

Re:only trying to help?

[Rich0]

Exactly my point. They are only trying to make money for themselves, and if exploiting a disaster make them more money, they will do that. Yet here we have people (like the OP) trying to claim that they are 'ensuring there are enough drivers'. Bullshit.

Free market pricing is desirable BECAUSE it ensures that there aren't shortages. That doesn't mean that this is the primary motivation of the participants in a market.

When you buy a smartphone you're not doing it to reward some kid for studying hard to become an engineer, but that is the result of your actions all the same. The smart kid isn't building the phone so that you personally can have one, but that is the result of his actions all the same.

All the benefits of a free market tend to be side-effects, but they're benefits all the same.

What is the alternative, capping prices and watching everybody stay home, so that you're stuck freezing on the side of the street when nobody wants to go pick you up?

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