Why do gas prices always have an extra 9/10 of a cent added on?
(NEXSTAR) – In case gas prices weren't high enough already, there's always that pesky fraction added onto the end: nine-tenths of a cent tacked on to every gallon.
You'll usually see this odd pricing posted at the gas station (and pretty much nowhere else). After all, it's not like we can pay in fractions of a cent – so why don't gas station just round up? Where does that 9/10 come from anyways?
The practice is a 100-year old habit that just won't die.
According to Ed Jacobsen, who founded the Northwoods Petroleum Museum in Wisconsin, the fraction-of-a-penny pricing started with the very first gas taxes imposed by states and the federal government starting in 1919 into the Great Depression.
At the time, a gallon of gas might only cost about 10 cents per gallon, so the taxes were smaller, calculated in tenths of a cent, Jacobsen told WSYR. Gas stations passed on the tax straight to the consumer by tacking it on to the price of fuel that day.
The tax wasn't always nine-tenths of a penny. Sometimes it was a smaller fraction. But by the 1950s, gas stations started rounding up to the 9/10 pricing, "squeezing the buck as far as they can," Jacobsen told CNN.
He also mentioned the persistent practice of "psychological pricing," a technique advertisers use to make things feel substantially cheaper than they are. It's the reason you're much more likely to see gas priced at $3.99 (and nine-tenths of a penny!) than $4 even.
In practice, with gas prices now far above 10 cents a gallon, the fraction is unlikely to affect your budget. Since we can't pay in fractions of a cent anyways, the final price you pay is rounded up or down to the nearest cent.