Why does gas always have .9 cent on the end, regardless of the price?

Question

Why does gas always have .9 cent on the end, regardless of the price?

Answer 1

it is a sales gimic ..the lower number sticks in peoples mind - so that they see 1.29 and think 1.2 instead of nearly 1.30.

Answer 2

Psychological pricing...$19.95...$9.95...etc. It is less then the next denomination. I agree that with gas, it really is just stupid, but they have been doing it forever.

Answer 3

It's a profit thing! You see 2.89 in large print, but you're paying an extra cent into someone's pocket.  It's just to make it look a penny cheaper.

Answer 4

The 9/10ths of a cent is taxation.  All gasoline sells for that because it is the federal taxes imposed on gasoline that have the 9/10ths attached to them.

Gasoline sells for whole cents per gallon all the way from the refinery to the retail station.  Once the tax is applied, that is when you see the 9/10ths added on.

How do I know?  I work for one of the largest oil companies in the world, managing gasoline inventories all over the country.  We ledger our gallons in whole cents and bill the station in whole cents.  The station sells you gasoline in whole cents, but taxes you according to the schedule set up by the federal, state, county and local governments.

Answer 5

Because gas stations want you to think that the gas is one cent cheaper (which is a lot of money when it comes to gasoline)... Because that .9 of cent rounds up to the next cent, which is the actual (higher) price.

Answer 6

if gas is 2.89.9 a gallion it really means that it it 2.90 a gallon -one tenth a cent

Answer 7

Gas prices are controlled by governmetal laws and regulations.  As an advertising gimick, they price to the max of course, but doesn't 3.99 sound less than 4.00?  Restaurants do it too, a sandwich for .99 sounds so much less than 1.00.

Answer 8

It doesn't. In my hometown in Nova Scotia, It never used to change but now it changes nearly every day.

Answer 9

Just a sales gimmick, like when they say something is 99 cents [under a dollar].

Answer 10

For the same reason why prices are usually $2.99 instead of $3.00.  It makes it seem like less money.

Answer 11

Its a psychological tactic to make you think its cheaper than it really is.

Answer 12

So they make 9/10 of a cent on every gallon.  They sell millions of gallons of fuel, so that's more money.  When people look at the sign, they see "1.999" but say "1.99" per gallon.  They're actually paying more than they think, but subconsciously.

Answer 13

It's a tax thing

Answer 14

http://www.wisegeek.com/why-do-gas-price...

Answer 15

I thnikk this is a holdover from the 1930s, when fractions of a cent were a significant part of the price of gasoline.  For example, if gas cost 8 cents per gallon, then a 1 cent increase is a 12.5% increase.  The pumps allowed pricing in .1 cent increments.  The habit stuck, just like most goods have prices ending in 99 cents.  The sellers have no particular incentive to change.