According to the AAA, the average national price on Tuesday was less than $ 5.02 per gallon. Prices are even higher in some states. California had the nation’s highest average price of $ 6.44 a gallon.
But why does the price of a gallon of gas always end up at the stations’ price plates at 9/10 cents? No other retailer advertises their prices in fractions of a cent. Coins are so useless these days that people throw them away or leave them at checkout counters rather than in their pockets.
Fractional prices first appeared in the early 20th century as states began to enforce sales taxes on gas to help build and maintain highways.
But why not charge a full percentage? Well, at the time, the average cost of gas was about 10 cents a gallon. So adding a cent was a big deal, especially for drivers who were tied up for money during the Great Depression. Instead of an integer equivalent to a 10% increase, gas stations added a fraction of a cent.
By the 1950s, the interstate highway system had developed, and gas stations had begun to advertise their prices on large boards, with most stations closing at a fraction of a 9/10 percent. Jacobson said this is one way to increase sales.
He said he was “squeezing the buck as much as possible.”
“For consumers, the price, such as 19.9 cents, is significantly lower than the price of 20 cents,” Schindler said.
Gas station owners now have computer programs that help them set prices, said Tom Kloja, global head of energy analysis for OPIS, which tracks gas prices at 130,000 stations nationwide.
Many station owners want their prices to be less than a tenth of a cent above the 9/10 dollar mark.
“A lot of small station owners will tell you that they are emotionally choosing the price,” Cloja said. “They’ll tell you it makes a big difference if it’s $ 4.999 or $ 5.009. Drivers don’t want to see $ 5.”
Although the AAA’s national average price is now over $ 5 a gallon for the first time on record, OPIS data shows that the average price for a gallon of common gas is still $ 4.999.
There have been occasional attempts to end the partial price for gas.
In 1985, Iowa banned the practice. “We don’t have a tenth of a coin,” the Iowa state senator said at the time. “It has been bothering me for years.” However, in 1989, the state repealed the law and most of the stations returned partially priced.
Chris Isidore of CNN Business contributed to this article.