Gig Workers Feel Sting of Costlier Fill-Ups

38% of ride-hailing and delivery drivers say they are driving less, and 15% aren’t driving at all.

March 21, 2022

Uber/Lyft Gig Driver and Passenger

ALEXANDRIA, Va.—Gig workers are feeling the pain of rising gas prices, reports the New York Times. Because people who work for companies such as Uber, Lyft and DoorDash are considered contract workers, they do not get reimbursed for filling their gas tanks, which is eating into their profits, if they turn one at all.

The national average for a gallon of gas is $4.25, according to AAA. One Uber driver interviewed by the Times said that he used to make about $200 a day working for the company, but now he barely breaks even after paying for gas.

“High gas prices are the final nail in the coffin,” Harry Campbell, who writes a blog called the Rideshare Guy and produces a podcast aimed at helping ride-hailing drivers, told the Times. “Rising gas prices make a tough situation even tougher, and for a lot of drivers it’s sort of the final straw that pushes them over the edge.”

Campbell recently surveyed 325 gig workers who follow his content, and he found that 38% are driving less due to high gas prices, and 15% had stopped driving completely.

Lyft and Uber have both added a temporary fuel surcharge paid by the customer to help drivers. Both companies say that the fees go directly to its drivers. DoorDash and Lyft both touted gas rewards or cash-back programs, but drivers have to open debit cards with the companies, reports CNN. DoorDash says that it will not charge its customers a gas surcharge because customers are also paying high gas prices.

Both companies, as well as Instacart, partnered with GetUpside for the programs. Uber drivers can stop taking trips to stop at gas stations included in the partnership, and drivers can save up to 25 cents a gallon. Lyft and Instacart have a similar programs with GetUpside, with Lyft drivers saving up to 32 cents.

Gridwise, which tracks gig workers’ earnings, found that earnings for drivers have gone up from an average of $308 a week in early January to $426 in early March, but of course, gas costs have gone up from $31 a transaction to $39.

Uber could factor in gas prices into the algorithm that determines how much drivers get paid, says Christo Wilson, an associate professor at Northeastern University who studied Uber's algorithms.

"They know where drivers are and getting the average gas price in that area wouldn't be challenging," Wilson told CNN Business. "They also know how far and how long drivers are active during trips, as well as the make and model of their car, so estimating their fuel usage shouldn't be too challenging either."

Uber says that it doesn’t want to factor in gas prices into the algorithm because it doesn’t want driver earnings to decrease if prices fall or shift unpredictably.

A gig worker interviewed by CNN says that the fuel surcharge Uber and Lyft tacked on should have been calculated on a per mile basis, instead of a flat fee per trip. Grubhub is implementing a surcharge similar to the worker’s suggestion. The company increased its per-mile-distance pay earlier this month to be "consistent with average per mile cost increases for gas in your region." The company also said it would provide "additional pay based on the estimated total miles driven ... for each calendar week."

According to NACS’ “Last Mile Fulfillment in Convenience Retail” report, 61% of retailers are satisfied with their third-party delivery partners. Concerns include high fees, little access to consumer data, difficulties delivering age-restricted products and service and operational issues. Read more about these challenges and what c-stores are doing to make delivery work for their businesses in “Delivering Convenience” in the December 2021 issue of NACS Magazine.