This one has bugged me for awhile. Why is it gas prices (at least everywhere I’ve been) are always some amount and nine tenths of a cent per gallon? I suspect it is for the same reason crap sold on TV is always $19.95, ie to make the consumer’s brain say “Wow, only $19.” How long have gas prices been this way, and are there places where they don’t mess with the .9 and just round to the next cent?
As I recall, you’ve got it mostly right. 
Part of it was to seem cheaper than the guy across the street who had 25cents when you were charging 24.9 and rounding it up at the register. The practice is still around.
I haven’t noticed anyplace that just charges, say, 1.30 instead of 1.299. With Digital pumps and the like, it’s very easy to do now. Course, it’s also very easy to rip off customers also by hacking the pump.
[blatant Simpsons reference]
…but at Donny’s Discount Gas, it was $1.49 and eight-tenths a gallon!
when gas first topped $1.00 a gallon in the US, the highest price the pumps could charge was $0.999. (They had physical dials to set for the price and only had 3 columns.) Stations in my hometown placed the price close to half and posted signs on the pumps saying the price to pay was actually double what the pump read.
Since the dials were stuck on the 9/10 of a cent, the prices they set at the pumps were like 0.569, which was really $1.138.
We answered this before, it’s the dealers profit side.
Buy your gas through priceline. It appears to be sold in whole cent increments. And it’s cheaper, too.
I’ve seen gas at, for example, 62.5 cents canadian per liter here in Calgary. This was at a station that normally charged xx.9 per liter. I think this is a variation on changing the price by half a cent. Psychologically, 62.4 isn’t much more attractive than 62.5 the way that 62.9 is more attractive than 63.0…
With a US$/gallon price scale, there is no need for fractional cent changes in prices, so this doesn’t come up. (Actually, it’s less than a 1% change in price in the above example, so it was pretty silly here too)