The History Of Texans Being Charged 9/10 On Gas Prices – What You Need To Know

(Mix 93-1)  Whether you realize it or not, that price per gallon of gasoline costs nearly a cent more than what's advertised thanks to a nearly century-old old tradition.

When you look closely at the price of a gallon of gas, whether it's on the pump or the bright LED sign out front, you'll see a fraction of 9/10. Yes, that's 9/10 of a cent and it's part of the price of that gallon of gas!

So why are we charged 9/10 of a penny for a gallon of gas?

The practice dates back to the Great Depression and the 1930s when a gas tax was first introduced by the federal government. When cars were becoming more popular the government imposed a tax to help fund infrastructure projects.

Gas was so inexpensive at that time and cost cents per gallon, so the government taxed oil companies and gas station owners a fraction of a penny per gallon.

This tax was supposed to be temporary, but ended up remaining permanent and remains part of the price of gas to this day. (auto.howstuffworks.com)

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As with any business, taxes are passed on to the consumer and for a time some stations charged 4/10, or 7/10 or 8/10 instead of simply increasing the price of a gallon by a full penny. Today, the industry still holds onto this practice and it has become  industry standard.

Profits increase thanks to the 9/10

While it may not seem like much at all, every $0.00.9 cents per gallon adds up because the gas station sells gasoline in volume. For instance, if a gas station sold 100,000 gallons of gas in a month, the extra 0.9/gallon would bring in an extra $900 off that fraction of a cent alone.

Psychological pricing

Pricing fuel this way 'tricks' your mind into thinking the price is lower than it is. You perceive a gallon of gas priced at $2.49 a gallon to be less expensive than if it were priced at $2.50. The same phenomenon happens when purchasing something at the store that costs $9.99 instead of $10.00.

Overall though, the 9/10 of a cent is inconsequential in the total price of your fill-up. If you were to fill up a 20-gallon tank, it equates to about 20 cents of the total price. When factoring in today's prices, that's nothing.