The origin of fractional gas pricing dates to 1919, when states began imposing gasoline taxes. At the time, a gallon of fuel averaged around 10 cents. To calculate small taxes without rounding, state and federal governments applied them in tenths of a cent.
Rather than absorb the cost, fuel stations passed it on directly to consumers by tacking on those fractions to the pump price. Over time, this became a standard practice.
The tax wasn’t always nine-tenths of a cent. It varied in size, depending on the state and the era. But by the 1950s, stations commonly settled on the 9/10 pricing structure.
According to Ed Jacobsen, founder of the Northwoods Petroleum Museum in Wisconsin, this became a way for fuel retailers to “squeeze the buck as far as they can.” The amount may be fractional, but its visibility on signs and receipts became a lasting fixture.
Jacobsen also pointed to the idea of psychological pricing, a technique used to make prices appear slightly lower than they are. In this case, pricing fuel at $4.99 and 9/10 instead of a clean $5.00 provides the perception of a more favorable price.
Do Consumers Actually Pay It? Not directly. Since U.S. currency doesn’t
support fractional cents, the total is automatically rounded at the register. While the nine-tenths figure adds up across fuel volumes, it typically doesn’t change an individual buyer’s total in a noticeable way.
With modern gaolines prices far above early 20th-century levels, the original reason for fractional pricing no longer carries the same weight.
Although the original tax-related reason for nine-tenths pricing no longer applies, the format remains widely used at fuel stations across the U.S. today, it continues largely due to established pricing conventions and psychological pricing strategies.
Prices such as $4.99 9/10 are still used in signage because they are seen as more appealing than rounded figures. While consumers do not pay fractions of a cent directly, the format remains a standard feature in fuel retail displays.
Full story Why Gas Prices End in Nine-Tenths of a Cent • iDriveSoCal
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