- The Washington Times - Monday, March 14, 2022

Ride-hailing, restaurants and transportation companies are adding surcharges to cover higher costs of trips and deliveries because of rising U.S. gasoline prices.

Starting Wednesday, Uber rides will cost 45 to 55 cents more per trip and Uber Eats food deliveries will cost an extra 35 to 45 cents for at least two months. The temporary surcharge will offset rising fuel costs that drivers pay out of their pockets.

Meanwhile, drivers have started a petition at Coworker.org asking Uber and Lyft to raise customer rates and lower company profit shares. They say they cannot earn a living because of increased gas expenses. More than 8,500 people had signed by Monday afternoon.

Mamma Lucia, a Washington-area Italian and pizza chain, added a 2% surcharge for indoor service last week to offset increased food prices.

AAA reported Monday morning that the average cost of a gallon of gasoline in the U.S. hit $4.32, down slightly from a record high of $4.33 on Friday.

Prices were up from $4.06 one week ago, $3.49 a month ago and $2.86 a year ago.

Francisco Gonzalez, CEO of the Florida-based Fearless Journeys, which sells group trips for entrepreneurs, said other companies may have raised prices without specifying gasoline as the reason.

“Most companies are not usually explicit as to why their prices are going up, but in this case, Uber seems to be very transparent about why their prices are rising by showing customers a specific surcharge amount for rising fuel prices,” Mr. Gonzalez said.

Although he has not raised prices, Mr. Gonzalez said many of his customers “are now factoring in the cost of flying or driving into a decision on whether coming on one of these trips is still an affordable option.”

Ross Emmett, a professor in the history of economics at Arizona State University, said companies listing a separate “surcharge” for gas expenses on customer receipts suggests uncertainty about future prices at the pump.

“The surcharge could be removed without changing their price, but whether that becomes a permanent feature depends on the company,” Mr. Emmett said. “Some surcharges just become a permanent part of the price.”

Several factors have contributed to the rise in gas prices over the past year. One is a U.S. boycott of Russian-produced oil in response to Russia’s invasion of Ukraine.

The U.S. Bureau of Labor Statistics reported Thursday that the consumer price index rose to an annual rate of 7.9%, the highest inflation rate in 40 years.

Those increases, including gasoline prices, covered the 12 months ending in February. Since Russia invaded Ukraine on Feb. 24, AAA said, the average cost of a gallon of gas in the U.S. has risen 62 cents.

Economics writer Jeffrey A. Tucker, president of the libertarian Brownstone Institute in Texas, said many companies’ labor costs were rising during the pandemic because of global supply chain issues.

“You can duck and weave only for so long,” Mr. Tucker said. “In the end, every producer must either raise prices or suffer ongoing losses.”

Economists were divided Monday on how long they thought the gas surcharges would last.

“The increases would be temporary if gasoline supplies were to increase and prices fall,” said Charles N. Steele, an economics professor at Hillsdale College. “But the Biden administration has worked to reduce investment and supply of fossil fuels, including restricting leases, drilling, fracking, and blocking the Keystone XL pipeline.”

Richard W. Rahn, chairman of the nonprofit Institute for Global Economic Growth and a Washington Times columnist, said prices could remain high for a while.

“Until you have a pipeline and trucking infrastructure, you can produce all you want, but you’re stuck,” said Mr. Rahn, who writes a column for The Washington Times. “I’m old enough to have lived through the inflation of the 1970s, and it wasn’t pleasant.

“This isn’t price gouging because everybody’s costs are going up,” said Mr. Rahn, who was a member of President Reagan’s tax policy task force.

Daniel Lacalle, chief economist for Madrid-based Alpha Strategy Consulting, said he expects U.S. companies to remove the surcharges as soon as possible.

“Very few businesses are really hiking prices and improving margins. The reality is that inflation is eating away disposable income of families as well as operating margins of businesses, causing many to suffer large working capital challenges,” Mr. Lacalle said.

He said global crude oil inventories were already being replenished Monday, setting the stage for lower gas prices in the coming months.

“New supply from the United States is expected to arrive in 2022, adding 2 million barrels per day,” Mr. Lacalle said. “OPEC should also increase production, as it maintains its supply cuts still today and can add up to 3 million barrels per day.”

AAA said California had the most expensive gasoline in the nation at an average of $5.74 per gallon. Hawaii and Nevada were not far behind at $4.95.

The states with the cheapest gasoline average per gallon were Kansas ($3.82), Missouri ($3.84), Oklahoma ($3.85), Arkansas ($3.89) and Nebraska ($3.89).

California’s prices are higher because of a state gas tax of 51 cents per gallon, the highest in the country, which funds environmentally friendly fuel blends.

Stephen C. Miller, a professor of economics at Troy University, said companies cannot ease the surcharges until gas prices stabilize.

“With gas prices being so volatile, Uber drivers do not know how much to charge to cover their costs on any given day, so it makes sense to tie their prices to fuel costs,” Mr. Miller said.

Corrections: Previous versions of this article incorrectly reported several facts. Mamma Lucia has added a surcharge for indoor dining, the Consumer Price Index for February is 7.9%, and California’s gasoline tax is 51 cents per gallon.

• Sean Salai can be reached at ssalai@washingtontimes.com.

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