According to Emil Michael, Uber’s previous chief business officer, a lack of drivers combined with increased demand and rising energy prices might result in more expensive rides for ride-sharing customers well beyond 2022. Michael gave his opinion on the prospects of ride-sharing on Barron’s MarketBrief.
“Demand is still high, and I believe prices will remain high for a while,” stated Emil Michael, who worked with Uber for nearly four years. “If petrol costs reach $5 a gallon, drivers will not get on the road unless they believe they will be able to cover up the deficit by driving.” That motorist might decide to do anything else.”
Uber’s income increased 72 percent year over year in Q3 2021, but the ride-hailing giant continues to suffer from supply and demand imbalances. “There are several crosscurrents, pluses, and minuses.” And that’s why the stock price of Uber is where it was at IPO, a week ago, or even several months ago,” Emil Michael explained. “No one can say how long any of these shifts will last.”
Costs of fuel are rising.
“As gas prices rise from around $2 per gallon in a typical city to $3.50 or even $4 per gallon in a typical city, as a portion of the driver’s cost structure, that is roughly 20%, you’ll see drivers grow by 5 percent or 10 percent, not 20%.”
According to Barron’s, the average cost of petrol for every gallon in the United States of America is now $3.42. A gallon of gas cost roughly $2.11 per gallon a year ago. Oil prices have reached new highs not seen since 2014. For Lyft and Uber drivers, the rising cost of gas has become a constant battle.
“If the situation worsens, the Saudis, as well as OPEC, have stated that they have no plans to increase fuel output in order to cut prices.” As a result, part of our gas output in the United States has slowed as a result of fracking and even some of the present administration’s measures. It’ll be unpredictably volatile, but as gas prices rise, you’ll continue to lose drivers.”
Emil Michael also mentioned that the demand for secondhand cars is driving up the prices of both new and used cars. As per Kelley Blue Book, the price of used cars in the United States is up 12.19 percent over this time last year.
“If you’re an Uber driver, and your expenditure is the depreciation on this vehicle that you acquired at a greater price since there was a reduced supply of [them] as well as fuel prices are rising, with two forces acting against you today,” Emil Michael remarked.