Why Do Gas Prices Always End in .9 Cents?

(NEXSTAR) — If gas prices weren't already steep enough, there's an additional annoyance: a persistent fraction tacked onto each gallon, specifically nine-tenths of a cent.

You typically notice this unusual pricing at the gas station (and almost never anywhere else). Since we cannot pay in fractions of a cent, why don’t gas stations simply round up? So where exactly does that 9/10 come from anyway?

This tradition is a century-old custom that refuses to disappear.

Ed Jacobsen, the founder of the Northwoods Petroleum Museum in Wisconsin, points out that the practice of setting prices at fractions of a penny originated with the initial gasoline taxes levied by state and federal governments beginning in 1919 through the period of the Great Depression.

Back then, a gallon of gasoline could be purchased for approximately 10 cents, hence the taxes were relatively modest, measured in increments of one-tenth of a cent. Jacobsen told WSYR Gas stations directly transferred the tax to consumers by adding it to the fuel prices that day.

The tax wasn't consistently nine-tenths of a penny. It sometimes amounted to an even lower fraction. However, by the 1950s, gas stations began rounding up their prices to the 9/10 mark, "pushing the limit as much as possible," according to Jacobsen’s statement for CNN.

He also pointed out the continued use of " psychological pricing," a strategy employed by advertisers to make products seem considerably less expensive than they actually are. This explains why you're far more apt to encounter gas priced at $3.99 (plus an additional tenth of a cent) rather than simply $4.

In reality, considering that gas prices have risen well over 10 cents per gallon, this fractional amount probably won't impact your finances significantly. Given that payments are typically rounded to the nearest cent anyway, the precise fraction isn't really relevant when determining what you end up paying.

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