Critics of Uber have often criticized the transportation company’s use of “surge pricing” to up the price of its service during extreme weather. Today, the company changed its policies to make its service less costly when a city it serves is hit by a crisis.
In a blog post, Uber announced that it is imposing new rules for disasters: most notably, the company will put a cap on surge pricing during emergencies or disasters, and it will donate its commission from any surge pricing in a disaster area to the American Red Cross.
Here’s how the cap works: any surge in a region hit by a disaster will be capped below the rate charged on the three days with the highest surge prices in the 60 days leading up to the emergency. In other words, if Uber only charged at most 2.5 times its usual fare in the two months before a hurricane hit, that’s the highest its surge will go.
This new system won’t prevent surge pricing, but it should help keep the surge multiplier below truly absurd levels. Considering that New York saw surge pricing of more than 8 times Uber’s normal fare during a snowstorm in December, this system should help make it easier for people to get around.
This is good news, especially as the U.S. heads for prime hurricane and fire season. With Uber growing in popularity around the country, there’s a good chance that the company’s services will be needed when disaster strikes.
In the past, Uber CEO Travis Kalanick has said that surge pricing is necessary, even in the midst of a disaster, because it will help moderate demand, encourage drivers to get out on the road and allow Uber to ensure its cars are always available. That reasoning didn’t fly with New York Attorney General Eric Schneiderman, who started an investigation into whether the company’s practices ran afoul of his state’s price gouging law.
Today’s news is the result of an agreement between the Attorney General and Uber, though the company is rolling this policy out to all the markets it serves, not just New York. In a press release put out by Schneiderman’s office, Kalanick seemed reasonably pleased with the agreement.
“This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters,” he said in a statement. “Our collaborative solution with Attorney General Schneiderman is a model for technology companies and regulators in local, state and federal government.”
This summer has been a month for Uber to start collaborating with local governments. Yesterday, the Seattle City Council voted 6-3 to repeal the ordinance that had limited UberX, Lyft and Sidecar drivers — opening the door to approve a settlement brokered by Mayor Ed Murray.