Uber Will Cap Price Surges During Emergencies

A blog about business and economics.
July 8 2014 4:45 PM

Uber Will Cap Price Surges During Emergencies

451565450-in-this-photo-illustration-the-new-smart-phone-taxi-app
Uber's phone app.

Photo by David Ramos/Getty Images

Uber has agreed to drop one of its most controversial policies when disaster strikes. New York state Attorney General Eric Schneiderman announced this afternoon that the ride-sharing company known for adjusting fares based on demand—a model known as dynamic pricing—will cap its price surges during emergencies to comply with a New York law against price gouging in times of need. Schneiderman said in a statement that Uber will adopt a similar policy nationwide.

The relevant New York law was passed in the winter of 1978-79 in order to protect consumers from rising oil prices. In general, it aims to prevent merchants from imposing extreme price hikes during an "abnormal disruption of the market" caused by "extraordinary adverse circumstances":

For purposes of this section, the phrase "abnormal disruption of the market" shall mean any change in the market, whether actual or imminently threatened, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, or other cause of an abnormal disruption of the market which results in the declaration of a state of emergency by the governor.
Advertisement

Uber will not totally eliminate dynamic pricing during emergencies but will instead cap how high its rates can go based on what it charged consumers over the previous two months. The agreement between Uber and the AG's office states that if Uber employs price surging during an "abnormal disruption of the market" it will go no higher than the fourth-highest price charged in the area (all on different days) over the past 60 days. So if Uber's highest surges were 5X, 4.25X, 3.75X, and 2.5X in that period, it could charge no more than 2.5X during the emergency.

Of course none of this has any bearing on Uber's pricing practices during non-emergency times. That means you might still get stuck with a $100 bill on a snowy Friday night—and that's OK. Uber's dynamic pricing practices are generally a great way of bringing demand for car services in line with supply. But in case a hurricane devastates Manhattan or aliens invade the Financial District, one thing you won't have to worry about is the price of that Uber ride home.

Alison Griswold is a Slate staff writer covering business and economics.

TODAY IN SLATE

Foreigners

The World’s Politest Protesters

The Occupy Central demonstrators are courteous. That’s actually what makes them so dangerous.

The Religious Right Is Not Happy With Republicans  

The XX Factor
Oct. 1 2014 4:58 PM The Religious Right Is Not Happy With Republicans  

The Feds Have Declared War on Encryption—and the New Privacy Measures From Apple and Google

The One Fact About Ebola That Should Calm You

It spreads slowly.

These “Dark” Lego Masterpieces Are Delightful and Evocative

Crime

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

Politics

Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Activists Are Trying to Save an Iranian Woman Sentenced to Death for Killing Her Alleged Rapist

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

  News & Politics
Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
  Business
Moneybox
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
  Life
Outward
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
  Technology
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?