Gasoline Prices & 9/10

[Explain this!]

Why do gasoline prices end in 9/10 and not 99/100, etc.?

If 1/10 is added to 9/10, this will equal 10/10 or 1. If 1/100 is added to 99/100, this would equal 100/100 or 1.

I know that $4.55 & 9/10 per gallon is almost $4.56 per gallon, but would it still be almost $4.56 per gallon if the price ended in 99/100, or 999/1000, etc.?

 

[Dr.Peterson]

Why do gasoline prices end in 9/10 and not 99/100, etc.?

If 1/10 is added to 9/10, this will equal 10/10 or 1. If 1/100 is added to 99/100, this would equal 100/100 or 1.

I know that $4.55 & 9/10 per gallon is almost $4.56 per gallon, but would it still be almost $4.56 per gallon if the price ended in 99/100, or 999/1000, etc.?

One possible reason: There is a unit of money called a mil, which is 1/10 of a cent; so it's natural to stop there (and more so when this practice began).

Another: from what I read, the practice began as a way of passing on taxes on small prices, which would be measured in the tenth of a cent (that is, in mils).

And a reason not to go to hundredths: adding another digit would add cost, rather than saving it.

Did you try, as I did, searching for "why do gas prices end in 9" or the like? Among the hits I got:

Why do gas prices end in 9/10 of a cent?

Marketplace investigates why gas prices end in a fraction of a cent.

www.marketplace.org

Why Is 9/10 Added to Gas Prices?

The practice of tacking 9/10 of a cent on the end of a gas price goes back to a decades-old tax imposed by state and federal governments. It was supposed to expire but never did.

auto.howstuffworks.com

 

[JeffM]

This has nothing to do with math. It is all about marketing.

It is mathematically correct that 99/100 of a cent is closer to a penny than 9/10 of a penny. Let’s say the average sale is about 20 gallons. At 4.56 a gallon, a sale of 20 gallons generates revenue of 91.20. On a purchase of 20 gallons at $4.569 a gallon, we get $91.38, a pick up of 18 cents on the average sale. At 4.5699 per gallon, we get $91.398, which rounds up to $91.40. We could pick up another 2 cents on the average sale. But there may be costs associated with pricing at such increments, larger signs for example. Even rather minor costs may not be worth 2 cents.

 

[Steven G]

I too thought that gas prices has always ended in 9/10. However watching some old tv shows I noticed that was not always the case. I forgot what I saw but it was clearly not 9/10. It was however ?/10, like 6/10.
These days your question is quite valid, but if we are going to talk about gas prices of all times, the question should be why have gas prices always ended in 10th of a cent.
One important thing to note is that the gas prices that I am talking about is just from 1960 on. Prior to that, maybe it didn't end in 10th of a cent.

 

[JeffM]

I too thought that gas prices has always ended in 9/10. However watching some old tv shows I noticed that was not always the case. I forgot what I saw but it was clearly not 9/10. It was however ?/10, like 6/10.
These days your question is quite valid, but if we are going to talk about gas prices of all times, the question should be why have gas prices always ended in 10th of a cent.
One important thing to note is that the gas prices that I am talking about is just from 1960 on. Prior to that, maybe it didn't end in 10th of a cent.

@Steven G No. It is a marketing gimmick from way back. It actually is less valuable than it used to be when gasoline was 35 cents a gallon.

 

[Steven G]

@Steven G No. It is a marketing gimmick from way back. It actually is less valuable than it used to be when gasoline was 35 cents a gallon.

No, about the price ending in less than 9 tenths of a cent?

 

[JeffM]

No, about the price ending in less than 9 tenths of a cent?

I can’t remember.

 

[Explain this!]

One possible reason: There is a unit of money called a mil, which is 1/10 of a cent; so it's natural to stop there (and more so when this practice began).

Another: from what I read, the practice began as a way of passing on taxes on small prices, which would be measured in the tenth of a cent (that is, in mils).

And a reason not to go to hundredths: adding another digit would add cost, rather than saving it.

Did you try, as I did, searching for "why do gas prices end in 9" or the like? Among the hits I got:

Why do gas prices end in 9/10 of a cent?

Marketplace investigates why gas prices end in a fraction of a cent.

www.marketplace.org

Why Is 9/10 Added to Gas Prices?

The practice of tacking 9/10 of a cent on the end of a gas price goes back to a decades-old tax imposed by state and federal governments. It was supposed to expire but never did.

auto.howstuffworks.com

One possible reason: There is a unit of money called a mil, which is 1/10 of a cent; so it's natural to stop there (and more so when this practice began).

Another: from what I read, the practice began as a way of passing on taxes on small prices, which would be measured in the tenth of a cent (that is, in mils).

And a reason not to go to hundredths: adding another digit would add cost, rather than saving it.

Did you try, as I did, searching for "why do gas prices end in 9" or the like? Among the hits I got:

Why do gas prices end in 9/10 of a cent?

Marketplace investigates why gas prices end in a fraction of a cent.

www.marketplace.org

Why Is 9/10 Added to Gas Prices?

The practice of tacking 9/10 of a cent on the end of a gas price goes back to a decades-old tax imposed by state and federal governments. It was supposed to expire but never did.

auto.howstuffworks.com

Yes, I searched the Internet, but I did not find an answer to my question. Thank you for the URLs and you reply.

 

[Steven G]

your post gave me the idea to google for information before 1960))) I never thought about it)

What did you learn?