There is a difference between market exuberance and price gouging, and today we have Uber Inc. to thank for demonstrating the difference to us. Uber’s supposedly demand-based pricing failed miserably in the wake of the terrorist incident, when Uber started charging frightened Sydney customers 400 percent of its regular fares.

Some feel Uber was unfairly criticized, here on SiliconANGLE, the story was headlined, “Uber unfairly attacked over surge pricing during Sydney terror attack.” Others, meanwhile, complained of price gouging, which Wikipedia describes as:

A pejorative term referring to a situation in which a seller prices goods or commodities at a level much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies.

While I do not know Australian law, if Uber quadrupled prices during a terror attack in Miami, it would not bother me what the angry mob did to the company or its drivers. Here’s why, again Wikipedia:

As a criminal offense, Florida‘s law^[2] is an example. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent.

Transportation is an essential service, and a terror attack seems to qualify as a civil emergency. While I understand the law of supply and demand, I also understand that screwing people during an emergency is bad citizenship and bad business.

Uber, eventually, seemed to come to my conclusion. After scathing criticism online, the company dropped surge pricing in Sydney and began offering free rides and sending refunds to its gouged patrons.

I am no fan of consumer pricing that makes sudden large increases for essential services, like transportation. If Uber wants to charge more for rides during known high-volume times and says so in advance, I understand. But 400 percent is never reasonable.

Uber says its surge pricing causes more driver to enter the system because they can earn higher fares. The increased fares are supposed to help supply rise to meet demand.

Mashable calls surge pricing a “PR crisis that won’t go away.” At least until the pricing does. Surge pricing may, however, be so baked into the Uber model that ending the practice will also make Uber less-attractive to profit-hungry investors.

Hopefully, customers will realize Uber cannot be relied upon and will take their business back to regulated taxicabs. We regulate essential services for a reason.

Uber is as nasty a company as tech has managed to spit out in a long time, at least since Zynga, which seems sorta mild-mannered compared to Uber. If Uber wants to provide an essential service, the company should be regulated like other essential service providers.

Meanwhile, customers need to understand that supporting Uber may mean that when they really need transportation, they won’t be able to afford it.

Don’t count on Uber.

Photo Credit: Uber Drivers Network NYC via Facebook