Platforms Such As Uber are Suffering From Higher Fuel Costs in the US

Surges in the price of oil in the US has led to many problems and it has made a lot of impact on car drivers in the US’ gig economy. This is concerning workers in ride-hailing and delivery app workers. A 59% rise in the cost of petrol over the past 12 months have caused employees to overhaul the way in which they work and so how the platforms operate.

Drivers have made many changes in order to adapt to the rising costs of fuel. Some drivers have decided to reject customers who do not fall within a certain radius in order to reduce the costs of drivers having to drive without being paid. Others have reduced their hours as there isn’t as much reward for working harder. Some employees have simply quit as the work isn’t worth the pay whilst some have looked to new jobs to replace or add to their current driving jobs.

There has been a recent periodical driver shortage for the largest ride-hailing platforms in the US: Uber and Lyft. This has been exacerbated by the changes to how employees are working, as an industry blog reports that the number of hours being driven is declining. A study found that 12% of all drivers quit the workforce and that around half were driving less than before.

Part of the reason why drivers are so affected is that they need to pay for the petrol they use. This is because they are considered independent contractors rather than employees for platforms such as Uber and Lyft. Because they need to cover their own expenses it is more difficult for them to generate a good income in the end. It could be argued that platform-based gig economies often pass on economic risks to their workers.

Uber and Lyft have tried to ease the pressures of the costs of fuel by trying to set up deals with apps such as GasBuddy and GetUpside to try and get discounts on fuel costs.

The problem with high fuel costs may act as a catalyst in the electrification of the gig economy’s vehicles. Uber and Lyft have already encouraged the switch for current drivers now in order to try and evade high fuel costs. Uber has now announced plans to provide 50,000 electric Tesla cars for drivers to rent. This is in line with their plans to go all-electric by 2030 due to the environmental benefits.

Gas prices have lowered slightly in the past week due to the fears of the Omicron variant leading to a retreat in the oil market. It is feared that a rapid spread of the Omicron variant, as well as more adverse impacts from it, will lead to less mobility worldwide. This is similar to how oil prices plummeted during the start of the pandemic in 2020 as major economies around the world were brought to a standstill as they went into lockdown. However, for now, the reactions of markets are still quite speculative as we learn more about the variant and so the change wasn’t too significant. Drivers have experienced little relief. In addition to that, fears of a reduction in mobility in the US may bring down oil prices but it will also lead to lower demand for ride-hailing services.


Written by Florian Mihindukulasuriya Thiserage

Researched by Hugo Denage


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