Business

Uber’s Surge Pricing Could Be Next In Line For De Blasio’s Latest Crackdown

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Guy Bentley Research Associate, Reason Foundation

After a tough few weeks battling New York City Mayor Bill de Blasio, Uber’s troubles in the Big Apple are far from over as the city government looks to clamp down on surge pricing.

City officials are examining how to limit Uber’s price system where fares rise during times of high demand, the New York Post reports. Uber argues that surge pricing rations the limited number of cars to those who need them most, while incentivizing other drivers to get on the road to make more money.

Uber has come out swinging against any price cap, with spokeswoman Alix Anfang saying the company will resist attempts to limit one of the most distinctive aspects of its business.

“Uber provides thousands of NYC driver-partners with better economic opportunities and the flexibility to be their own boss. Uber is against any bill that threatens the progress driver-partners — predominantly from the outer boroughs — are able to enjoy,” Anfang told the New York Post.

The New York City Council’s press office was unable to confirm plans for an analysis of capping Uber’s surge pricing. The mayor’s office was equally reticent, telling the Daily Caller News Foundation that it is “reviewing the legislation.”

NYC politicians are already on the warpath to limit surge pricing. Councilman David Greenfield introduced a bill last November “prohibiting for hire vehicles from charging excessive rates.” The legislation would cap surge pricing to 100 percent of the basic fare. While the move may prove popular with NYC Democrats, its price caps receive clear thumbs down from economists.

About 80 percent of the IGM Economic Experts Panel agreed with the statement, “using surge pricing to allocate transportation services — such as Uber does with its cars — raises consumer welfare through various potential channels, such as increasing the supply of those services, allocating them to people who desire them the most, and reducing search and queuing costs.”

Uber’s recent struggles against greater regulation in NYC have not been in vain. De Blasio was forced to u-turn his controversial policy of capping the growth of new licenses granted to companies such as Uber on July 22. The nation’s largest ride-sharing company fought the legislation with radio ads and a new feature on its app, showing customers what the effect of the city’s cap could be, including wait times of more than 25 minutes.

Instead of a nine-month freeze of the number of new licenses, the city will undertake a transportation study to assess the impact of the growth in the numbers of private hire vehicles.

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