Why NYC won't crack down on Uber price hikes

The San Francisco ride-hailing service has long defended price surging saying it is a good incentive that encourages drivers to get on the roads during the busy times.

Eric Risberg/AP/File
A woman leaves the headquarters of Uber in San Francisco, Calif.

New Yorkers using Uber may not like the high prices during holiday and peak hours, also known as “price surging,” but it is here to stay.

The New York City Council is drafting legislation to regulate Uber but it won't likely stop price surging because Mayor Bill De Blasio’s administration just released a traffic study revealing that Uber isn’t to blame for the traffic in the city.

Last summer, Mayor De Blasio proposed a cap on the number of Uber vehicles, blaming the ride-hailing service for congestion in the city. The mayor received a lot of pushback from the San Francisco company, which prompted him to commision a $2-million study to examine the impact of Uber and other ride-sharing services on Manhattan's bustling Central Business District. The study concluded that congestion is caused by construction, freight trucks, and a larger population – not Uber.

The news about Uber comes a few days after the company announced that it will be reducing its fares in more than 100 cities across the US and Canada.

In the past, Uber’s price surging has sparked a lot of outrage among various users on social media. Price surges happen when there is a high demand for drivers in a particular area, mostly on holidays, peak hours, and weekends. During these times the company enacts a price surge which charges a multiplier on every fare.

One user was outraged when she woke up and realized that Uber had charged her $362 for a 20-minute ride on Halloween. “Today is my 26th birthday. I live in Baltimore and went out with my friends to celebrate my birthday. When 3 AM rolled around, I suggested we take an Uber hole to avoid drunk driving,” the woman named Gabby posted on a crowdsource funding website, asking for help to raise her rent. “When I awoke this morning, I checked my bank account to, unbeknownst to me, I see a charge for $362. Not only is it my 26th birthday, it is rent day. My rent is $450 and I can no longer pay it today due to this completely outrageous charge”

The San Francisco ride-hailing service has long defended price surging, saying it is a good incentive that encourages drivers to get on the roads during the busy times.

"When demand for rides outstrips the supply of cars, surge pricing kicks in, increasing the price," the company explained in a release. "As a result, the number of people wanting a ride and the number of available drivers come closer together, bringing wait times back down."

In explaining how the surge works the company released a study, conducted by Chris Nosko, an economics professor at the University of Chicago, that shows rider and driver behavior during price surge hours. The company said that it normally sends price warning to users requesting rides during surge hours.

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