Here in Washington, ALL gasoline prices (and only gas prices) are listed as something and 9/10 of a cent.
The folks at BP refused to comment on pricing, but on their industry website (link courtesy of the folks at BP) I did find a possible answer among all the PR fog: Washington state has a 55.9 cent gas tax. It seems most other states also have gas taxes ending in fractions of a cent.
So, I’m asking your help in verifying this theory. What’s the fraction of a cent price on gas in other states? How does it compare with your states gas tax?
When I was in Canada last summer, I noticed that their prices were also to a tenth of a cent, but that last digit was rarely a “9”; they seemed pretty random.
Then I realized that the prices were not per gallon. They were per liter. At about 3.8 liters per gallon, moving the price up or down an entire cent per liter is a lot more significant than a one cent change per gallon. They had to change to fractions of a cent to compete with each other.
It’s the same trick as pricing things for $1.99 instead of $2.00, only back in the day gas was like 25 cents a gallon. So they just used a mill instead.
Even now, price changes are usually in the cents, it’s not like gas can always be near multiples of a dollar. But it can be near multiples of a cent and that’s why they do it.
When gasoline get’s to $50 a gallon, I"m sure we’ll see stations at $49.99 and by then they’ll be dropping the $0.009.
Depends where you are in Canada. Although all of Canada prices gas by the liter, I’ve noticed that in Ontario (for example), the last digit can be any number; but here in Alberta, it is rarely anything but 9. Local custom? Likely, but I honestly don’t know.
I am old enough to recall when Canadian gas stations sold gas in gallons, and in those days, the last digit was always 9, just as in the US.
My question is, should we be looking at this as them giving us a .1 cent discount or overcharging us .9 cents? The sign is $3.35(little 9).
If they are overcharging .9 cents, I purchase 13 gallons of gas at $3.359 and pay $43.667. If I purchase 13 gallons of gas at $3.35 I only pay $43.55, 11 cents less. That’s like taking a dime from every person filling up their tank, which I’m sure is happening thousands of times every minute across the continent.
Either way, I don’t at all understand the logic of pricing something in a unit that is not available to give in change, tenths of a cent. There is no logic.
But many countries no longer have the equivalent of 1c coins also. This does not pose a problem because a) cash transactions at rounded to the nearest coin amount, and b) non-cash transactions are still made to he nearest cent-equivalent.
The weird thing about fuel prices is that they are advertised to the mill (1/1000 dollar) when other prices aren’t. (and the weirder thing is that we do this in Canada as well, when, unlike the US, we have never had a 1/1000 currency unit formally defined.)
Here, I’ll try to explain it to you: Did you ever see something marked “Three for a dollar”, and you bought only one? How did you feel when they asked for 34 cents?
The answer to your question is clear: “Three for a dollar” really and truly means “34 cents for one, with a one-cent discount on the second and third ones.”
And similarly, “$2.999/gallon” means that we’ll discount … … no, wait, we don’t need to discount anything – We’ll just see how much you buy and then round it to the nearest cent.
If it was 3.00 a gallon you would still see how much you buy and round it to the nearest cent. It is not like the gas pump spits out gas in one penny increments.
You do realize that practically everything you buy results in a bill that includes a fraction of a cent? Throw 5%, 6%, 7% sales tax on top of an item that costs, let’s say $5.55 and you get $5.8275, $5.883 and $5.9385. Guess what happens with the fractional cents? It gets rounded before you’re presented with the bill.
Let’s not even bother to discuss places with 6 and 3/4 percent sales tax.
I’m surprised that this practice hasn’t died out yet. Back when they started the .9 cents nonsense, gas cost something like 15 cents a gallon. These days, gas costs around $4.00 per gallon, prices routinely jump by as much as 30 cents, and a substantial fraction of the population literally throws their pennies onto the ground because they’re too worthless to carry around. It just seems totally ridiculous that we still list gasoline prices to fractions of a penny.
Logically, you’re totally correct. but the typical customer is not logical. The typical customer sees one sign that reads “$3.279”, and another that says “$3.28”, and he WILL go to the cheaper one. Thus, none of the gas stations dares to be the first to use exact-cent pricing.
So as part of my masters, I took advanced managerial economics, in which my professor told us the following, and I paraphrase in layman’s terms:
For every gallon of gas, the companies charge $xx.xx9
Since there is no currency less than 1 cent, there is no way for them to give you 1/10th of a cent back in change. Therefore, for every gallon, the companies are keeping this extra one tenth. With the billions and trillions of gallons being pumped, imagine how much this adds up to.
It did get me thinking, if gas is $3.499 per gallon, then 10 gallons will be $34.99. I haven’t actually paid attention if this was the case, or if they charged me $35 even. However, even if the amount is exact and they aren’t making extra money off of someone who pumps 10 gallons, imagine how much they ARE making off of someone pumping 9 gallons.
In this case, 9 x $3.499 = $31.491
This means, the gas station is actually pocketing almost a WHOLE cent 9/10ths to be exact!! This is because they WILL round up the price to $31.50
Here is an interesting website which backs up what I’m saying. Hope this helps!