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Why Gasoline Prices Are Displayed With “9/10ths”

Retail gasoline prices continue dropping, but prices are still displayed with “9/10ths.” Why do gas stations still use fractions in their pricing?

Vintage gasoline station sign (seen on ebay) breaking down the price of a gallon.

AAA Texas says Houstonians on the average are now paying six cents less for a gallon than in the previous week, $2.27 per gallon. But your local gas station will have that price displayed as $2.279. It’s such a standard practice that you’ll often see “9/10ths” pre-printed on gas price signs. Ed Hirs is an economics professor at the University of Houston.

“It’s also related to the federal tax rate and state tax rates on gasoline. These are not in full pennies — they are in fractional pennies.”

The current state tax is 20 cents and federal tax is 18.4 cents per gallon. And in the 1930’s, a one-cent change in price was a big jump.

“Gasoline price wars were prevelant and it wasn’t always at the point-9/10ths cents, it was point-5 sometimes, or point-2.”

Retail experts have long known that goods priced slightly less than a whole number sound less expensive. If you buy 15 gallons at $2.279, you’re paying 13.5 cents more than at just $2.27.

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Ed Mayberry

Ed Mayberry

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Ed Mayberry has worked in radio since 1971, with much of his early career as a rock’n’roll disc jockey. He worked as part of a morning show team on album rock station KLBJ-FM, and later co-hosted a morning show at adult rock station KGSR, both in Austin. Ed also conducted...

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