Why do gas prices always end in nine-tenths of a cent?
BLOOMINGTON, Minn. -- Gas prices in Minnesota are about 40-cents higher today than just one month ago.
Counting your pennies may not help much these days, but what about an amount even smaller?
Viewers like Beth from Chanhassen wanted to know: Why do gas prices always end in nine-tenths of a cent?
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Fractional prices first appeared in the early 1900s as states and the federal government implemented gas taxes to help build and maintain highways.
Back in the 1930s, when gas was just 10 cents a gallon, adding a penny would seem like a huge increase by 10%, so they went with less than a cent.
Starting mid-century, it became the norm for gas stations to end prices in 9/10ths of a cent, and it's been that way ever since.
If 9/10ths of a cent is meaningless in today's economy, why continue doing it? WCCO asked Patrick De Haan, head of petroleum analysis at GasBuddy.
"Now every station engages in it, so if a station were to suddenly stop, they're gonna look more expensive and people aren't gonna fill up there as often," De Haan said.
He says nowadays, it's all about competitive pricing and marketing.
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"It's a psychological level, that is you're more likely to pull into a station at $3.799 than you would be at $3.80," he said.
Totals are always rounded, so you don't see tenths of a cent on your credit card bill.
"Nobody really wins," he said. "Consumers don't always win, gas stations don't always win, and that's why it's kind of held consistently."
GasBuddy says prices are expected to come back down ahead of Labor Day weekend.
