Why is the price of fuel at the pump posted as tenths (9/10)...

Answer by woodyanthony2000@mac.com
Submitted on 11/30/2005
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Why are gas prices at the pump always listed to nine-tenths of a cent? No one seems to know exactly where or when the practice originated, but everyone agrees gas was sold at the pump in fractions of a cent at least as far back as the 1920s or 1930s, when automobile culture really began to take off. Some say that the fractional pricing was introduced in response to federal gasoline taxes that were themselves assessed in parts of a cent. Others say that tiny price changes of a tenth of a cent were more significant back when a gallon of gasoline didn't cost much more than a dime. And everyone agrees that pricing at nine-tenths of a cent gives the station owner the same advantage a grocer might get for charging $1.99 rather than a whopping $2.00 for a bottle of sparkling water. Whatever its origin, the practice is now built in to the pricing system. Federal and state taxes on gasoline still work out to a fraction of a cent per gallon and get paid when distributors purchase fuel from the refineries. The distributors who sell to the filling stations often set their prices such that the total after tax ends with nine-tenths of a cent. The station owner who buys it can then just mark up the price by a few whole cents and pass along the nine-tenths to the consumer. In the 1980s the government of Iowa abolished nine-tenths-pricing on the grounds that it was deceptive but then rescinded the ban four years later.

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Question by jiggy
Submitted on 4/21/2004
Related FAQ: Gasoline FAQ - Part 4 of 4
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Why is the price of fuel at the pump posted as tenths (9/10) of a cent?

Answer by whitevette
Submitted on 8/3/2004
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Damn! This is cheap gas! LOL ! Seriously, 49 9/10 sounds cheaper than 50, doesn't it??? Well, a little.... Madison Ave. strikes again !!! LOL & have a good 9/10s day!

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