Q: Why The Odd Gas Prices?

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By Jasmine Viel - email

A: Hugh in Hollister asked, "why is gasoline priced the way it is? When buying gas, I paid $4.09 9/10. Why the 9/10? Why not round up the the nearest penny?"

According to the California Energy Commission, there are many opinions about why gasoline is sold in 9/10 of a cent rather then a full penny. Many assume it's marketing by the retailers - as $99.99 just sounds like a bargain compared to $100. Some say it's the way the excise taxes are figured and at one time it was 1.5 cents per gallon. Actually, there is no definitive answer. The earliest substantiated documentation the Energy Commission could find was from July 1, 1915 -

So, why does this practice persist?

Most likely it's consumer behavior in terms of their perception of the final price. Most consumers will view a retail gasoline price of $3.15 9/10ths as $3.15, rather than the more accurate retail price rounded up to $3.16.