Why do all gas prices have nine tenths of a cent?



The extra "tenths" is a very old tradition that's never gone away. In 1935, a Reno Nevada newspaper wrote about "selling third grade gasoline at eight and nine-tenths cents a gallon." 

In those times, a penny had considerable value. To raise the price of gasoline from 8 to 9 cents would be more than a 12 percent hike. To compete, gas stations raised prices by tenths of a penny. Around this time, federal and state excise taxes were also introduced in increments of tenths of a cent, so it made sense to keep the decimal value.

Perpetuated for Profit?

The tradition stuck. The U.S. Energy Information Administration, 'prime suppliers' of 'motor gasoline' reported sales of 372,833.5 thousand barrels sold in February 2007. These gas sales collected US$ 141 million in nine-tenths-of-a-cent increments. With gasoline prices in the US$ 2.00 to US$ 4.00 range, the 9/10 no longer serves a constructive purpose, and occasionally measures have been introduced to abolish it. From 1980 to 1984, the state of Iowa experimented with even cents, but eventually returned to the 9/10 pricing. 

Source: http://wiki.answers.com/Q/Why_do_all_gas_prices_have_nine_tenths_of_a_cent

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