Gasoline Prices: Why Measured in Mills ($/1000)?

I have a feeling UC may have answered this, but the archive search rarely works for me.

Why are gasoline prices measured down to the mill, i.e., 1/1000 of a dollar? (at least in the US)? Is it the $9.99-sounds-a-lot-cheaper-than-$10 theory? Or are Federal taxes making the pump price that way?

On the topic of gasoline: why has there been a 20-30% increase in prices since last December? (I don’t recall another war with Iraq. :))

Yep, that’s it.

More to the point, A) it was established when US money was worth about 10 times what it is today, and B) it allows stations competing directly on price (which used to happen more than it does today) smaller increments.

John W. Kennedy
“Compact is becoming contract; man only earns and pays.”
– Charles Williams

Those of you who missed the energy crises of the 1970s probably have missed out on ever paying for gas which didn’t cost XXX.9 cents. I can remember three reasons.

Some pumps couldn’t be set for more than 99.9 cents per gallon. One solution to this problem was to set the pumps for a price per half-gallon, for example 59.9 cents/half-gallon, which in this case meant the posted per-gallon price was 119.8. Others started selling gas by the liter, which when translated to a cost-per-gallon resulted in a rainbow of final fractions.

Lastly, sometimes there were price controls limiting the maximum station markup, which also often resulted in prices ending in a digit other than 9/10ths.

Cecil did cover it, sort-of.

Why do prices end in .99?

He doesn’t mention gasoline specifically, but I think this explanation can be considered a part of it.

Mr. K’s Link of the Month:

The Enchanted World of Rankin-Bass

My guess: You buy other things that are priced in fractional cents per unit - electricity, natural gas, heating oil. Gasoline is the one you buy often and pay for as you take it, so you notice it. Maybe if you bought milk by taking your bucket to the store for a fill-up the pricing would be similar. There’s a word for products purchased this way, but I can’t think of it.

Also, the nine thing.

OPEC nations were finally able to cooperate to restrict production and reduce supply, resulting in higher oil prices. As an Alaska Permanent Fund Dividend recipient ($1770 this year), I would like to say, “Thanks Saddam!”.


“Believe those who seek the truth.
Doubt those who find it.” --Andre Gide

But idiocy at least changes flavor elsewhere. Certainly $1.399 isn’t any more attractive to either buyer or seller today than 1.390. . .even if, say .399 ever was a bigger deal than $.390.

I don’t even understand why we use pennies at all anywhere today. . .simply because they meant something somewhere in the last century.

I do remember mil tokens used in Washington state for taxes when I was a child. I believe they’ve gotten over that habit, but I haven’t ever checked.