Uber was, rightly, getting a lot of NYC praise this weekend for jumping on the crippling outage of the popular L train that connects Brooklyn and Manhattan. The ride-sharing service smartly offered rides along the L route for only $2.75 — regular subway fare — even if the normal cost would have been $20-$30. We are good neighbors, Uber was trying to say, and we fill a critical need to keep New York moving! And it worked.
“They’re making up for all their bad press I guess. Either way, really loving it now,” wrote one happy Brooklynite on social media.
The story couldn’t have been any different in Washington D.C. on Monday morning. The DC Metro system experienced a widespread outage after there was a report of smoke at a station, leaving many commuters trying to get from Virginia into the District stranded. (Smoke in DC metro stations is now a very big deal, thanks to the horrific incident in January that left one woman dead and dozens hospitalized).
Once again, a major urban area has travelers in trouble trying to cross a river into the city. And once again, Uber was there. But this time, rides weren’t discounted. Instead, they were up to 5 times the normal cost, reports the Washington Post. As Uber is happy to do, the ride-sharing firm kicked in surge pricing. That meant customers paid nearly $40 for a 3-mile ride.
Price gouging by any other name is…price gouging.
Why would Uber be a good neighbor in one city and a horrible on in another? Well, to be fair, timing. The NYC outage was planned, and the DC outage was a surprise. The junior econ explanation here is that Uber raising prices is the most efficient way to summon drivers to the job. Thanks to surge pricing, far more folks got to work on time than would have otherwise. And isn’t that worth $30 or $40? You can make that case. I would argue that there are numerous flaws in that logic, starting with this: Does Uber really know that 20 percent more drivers sign on on when surge rises from 4.6 to 4.9 percent? No. Uber knows that’s how much desperate consumers are willing to pay in an auction when they have no other choice. That’s not the same thing, and it’s not actually efficient use of resources. It’s just profitable.
But even if you see it Uber’s way, I offer this tale of two cities as a cautionary example. Take advantage of great Uber discounts if you like. After all, Uber will take any marketing opportunity it can. But don’t fall for the fantasy that Uber is ready to be a good neighbor. Uber is ready to charge you $10 for a cup of sugar that one time you run out.