Uber and Lyft drivers’ take-home pay plummets as gas prices soar
When Phillipe Jean, 45, filled up his tank to drive for Uber on Sunday night, the price per gallon was $4.19, an “unfathomable,” figure he said. Seven hours later, it jumped to $4.45. “I’m barely breaking even and I’m driving a Prius,” Jean said. The Easton, Pennsylvania-based driver, who began working on rideshare apps four years ago, said fuel costs eat up about 10% of his take-home pay on average. Today, it’s about 60%.
Gas prices have dramatically spiked across the country as Russia’s assault on Ukraine intensifies. On Monday, key U.S. lawmakers reached a deal to bar imports of Russian oil into the U.S., paving the way for a rapid crackdown on crude from the country. Anticipating such a move, oil had its biggest daily swing ever, with the price of a barrel of Brent crude surging to nearly $140.
The surge has trickled down to the pump at a “staggering” pace, according to Patrick DeHaan, head of petroleum analysis at Gasbuddy, an app that helps users find and save money on gas.
The U.S. national average price of gas is up more than 49 cents in the last week, the largest seven-day increase ever, including the aftermath of Hurricane Katrina in 2005, GasBuddy data show. On Monday, the price surpassed its all-time high of $4.10 a gallon.
That’s making Uber and Lyft drivers consider whether a rideshare side-hustle is worth sustaining. In Phoenix, where a gallon of gas has soared to $4.16, Christina Brown, 46, spent $59 to fill up her Lincoln MKS sedan, almost double what she paid last summer. As a single parent, Brown supplements income from her job in operations at Delta Airlines Inc. by driving about at least 10 hours a week, and more if the apps offer promotions.
Those kinds of second thoughts pose a key challenge to a pandemic recovery for Lyft and Uber, which have struggled to find enough drivers to meet resurgent customer demand. The imbalance has resulted in higher wait times and fares for customers. The companies’ leaders have said supply has substantially improved since they first began doling out incentives and bonuses last year to lure drivers back on the road. But average weekly charges per mile during the week ending Feb. 27 were 18% higher than in January 2021, a period reflecting pre-driver shortage pricing, a sign that driver inventory hasn’t kept up post-Omicron, said YipitData analyst Peter Martin.
The unprecedented shock to prices at the pump could add more uncertainty to the equation just as many COVID restrictions are being lifted and more workers are heading back to the office. Earlier on Monday Uber raised its profit outlook for the current quarter, citing increased demand for rides.
It’s unclear whether the higher gas prices are being passed on to consumers just yet. But Uber said that for every 20% increase from today’s average, rider fares would only need to rise 1% to keep drivers’ and, Uber’s cut from each ride, “consistent.”
“Our platform only works if it works for drivers, so we’ll continue to monitor gas prices and listen to drivers over the coming weeks,” an Uber spokesman said. Lyft and Uber both pointed to their partnerships with GetUpside as a way of providing immediate relief for drivers. The rewards platform offers 25 cents in cash back for every gallon of gas purchased at participating gas stations, with higher rewards available for Lyft’s Platinum and Gold drivers.
But drivers are clearly concerned. A campaign aimed at getting ride-hailing apps to help drivers with fuel costs has gathered more than 5,500 signatures on organizing platform Coworker.org. The petition calls for Uber and Lyft to take a smaller commission from fares and to pay drivers the mileage its takes to pick up a passenger from the point where the request was accepted to the destination.
“Can’t afford to keep driving full time. Gas prices are driving us out of the rideshare industry. We need a rate increase!,” the petition reads.
Even before Russia’s invasion of Ukraine drove up prices, Brown was reconsidering working for rideshare apps. On Lyft, when a driver accepts a ride, the app only pays for the mileage once the driver has reached a passenger. “Some folks are 15 minutes away from where I’m starting and only go a mile away. I’d only make $2.50 on those rides,” she said. With the spike in fuel costs, those profits could be whittled away even more. “If it hits $4.25 I’m not going to be able to afford to drive,” Brown said.
Never miss a story: Follow your favorite topics and authors to get a personalized email with the journalism that matters most to you.