Fractional pricing ploy earning gas companies billions

By Rick Brady - bio | email
Posted by Phil Riggan - email

RICHMOND, VA (WWBT) - For as long as I've been driving -- and as long as I've been buying gasoline -- there's been one tiny question that's taken up about nine-tenths of my mind.

Since the price wars of the 1970s, Americans have been concerned with the price of gasoline. But it seems like we pay attention to the big numbers, what about the nine tenths at the end?

Fractional gas pricing goes all the way back to the early 20th century when a Texaco station in 1914 priced its gas at 14.5 cents per gallon.

It was during the Great Depression, when supply was running far above demand, that we started seeing nine tenths fractioning, and that nine tenths fractioning stayed around when the government took over gasoline price controls during the gas wars of the 70s, at least that's one story.

After doing some research and talking with folks in the government and private sectors, the consensus of opinion is that no one had an opinion. It's either a clever marketing ploy, like pricing a car at $12,999 instead of $13,000 or it's just something that has hung around and no one wants to do anything about it.

Now in case you were interested -- based on figures from the U.S. Energy Information Administration -- that nine tenths of a cent generates nearly $141 million in revenue for the gas companies a month. That's $1.7 billion a year.

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