Why does the price of gas end in nine-tenths of a cent?
I know it has something to do with tax purposes. Have you checked your Straight Dope books? There’s probably an answer in there.
And if you don’t have any Straight Dope books:
- DON’T ADMIT IT HERE!!!
- Go get some.
It’s for the same reason why they charge $19999 instead of $20000 for a car. Or charge ‘$399 a month’. People see “169.9” and somehow think that gas is $1.69. I think it’s a mixture of psychology and innumeracy. For what it’s worth, I have seen gas at half-cent values in Canada, but I think that’s mostly because gas is sold in liters where half a cent is more significant (roughly a 69.5 price vs. roughly a 169.5 price.) Prices are usually at .9 numbers, though.
I am pretty sure that it is the same reasons that everythng else ends in 99 cents. The master has done a column on this. The URL for it is http://www.straightdope.com/classics/a3_166.html.
You’ve probably nailed it, but don’t discount corporate and consumer inertia as factors (i.e., it’s always been that way, so why change it).
Back in the 80s, the state of Iowa had a law against nine-tenths pricing for gas – as I recall, the average price of gas rose by somewhat more than 0.1 cent/gallon when the law took effect. Anyway, the even-cent pricing never really caught on; consumers didn’t seem to care one way or the other, and the law was repealed or allowed to lapse (this was quite a while ago, and I haven’t lived there since 1987).