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"Q--Why do gasoline prices end in nine-tenths of a cent?A--I could not find anyone able to provide a definitive answer, but there were several speculations. One is that it came into being as a result of the taxes, both state and federal, that caused prices to end in fractions. Seems unlikely.Another idea is that the price goes back to a time when a penny was actually worth something so for every ten gallons a person purchased, they kind of got one free. Nah, it doesn't add up.The most plausible reason is simply a marketing tactic. It is the same reason a steak is $19.95 or a car is $32,995. Psychologically, it looks and sounds cheaper."
With gasoline prices still near record highs for the Memorial Day weekend -- the traditional start of the summer vacation season -- every penny counts as U.S. drivers try to find the best deal at the pump.But without knowing it, or maybe even caring, drivers are paying service stations a little extra every time they fill up. Why? The odd way U.S. gasoline is priced -- to the 9/10ths of a cent -- provides the oil industry with millions of dollars in extra profit each month.When the sign at a service station advertises regular gasoline for sale at $3.89-9/10 a gallon, most drivers focus on the first three digits in the price and think the cost is $3.89 a gallon. Drivers actually pay $3.90.They don't have a choice. For decades U.S. gasoline has been sold at a price that ends with 9/10ths of a cent, with retailers rounding up the cost of a gallon to the next penny."Most people don't see that 9/10ths. Psychologically, it's a marketing ploy," said John Townsend, spokesman for the AAA mid-Atlantic region.Service stations know that ending the advertised price for gasoline with 9/10ths makes drivers feel they are paying less for fuel, he said.
The use of fractional prices goes back to at least seventy or eighty years back. In 1914, a Texaco service station's gas price was 14.5 cent per gallon. But 9/10 cent fraction pricing came during the 'great depression' of 1930s. The great depression decimated the demand for gasoline. More than 2.6 million cars and trucks were taken off the road, and the consumption of gasoline was down a billion gallons per year in both 1932 and 1933. Gas stations fought to service. Production at the time was running far above demand and the market quickly went into a serious oversupply situation. It was at that time that premiums such as candy, cigarettes, ashtrays, dolls and countless other giveaway items made their appearance at service stations. In such a competitive climate the gasoline marketers of the day were attracted to the concept of fractional pricing. Incidentally mechanical gasoline pumps with provision to set fractional price made their appearance at service stations around same time.
2.80-ish around here. I did notice Sam's was below 2.75, but I didn't see by how much. I haven't seen anyone over 2.99 for a few days now, even the guys right off of the interstate.
$2.59/gal in Tumwater, WA last Sunday. Strange how the price of gas bottomed out right before Election Day.
That's not exactly cheap.
I know it's not really relevant to anyone on here since it's not America, but fuel prices have dropped a lot here and are crazy cheap right now. When I filled up last month it's was in the 1.30 range and it's dropped over 20 cents. It looks like it might actually hit 1$/litre at some point soon.I don't think I've seen it this low in 5 or 6 years to be honest.http://i.imgur.com/xMKFFvr.jpg
Where is here?
Prince Edward Island. It's too bad we can't set our location in our profiles anymore.
I got an extra dollar off. It's selling for $1.99 and I and have over 1000 fuel points after buying a bunch of gift cards.
It was $2.19 at the local Kroger.
Investors Freak As Saudi Inaction Could Sink Oil To $20 A Barrel. Time To Buy?Christopher Helman Forbes Staff 1/06/2015 @ 10:06AM 31,439 viewsComment NowFollow Comments OPEC is not going to come to the rescue. It is up to American producers to cut oil supplies.The world freaked out over oil Monday. U.S. crude fell as low as $49.77 a barrel, down about 6%. Brent crude is at $53. This is the lowest price since early 2009, when oil bottomed at $35 less than nine months after hitting a record high of $147.The Dow Jones Industrial Average fell 331 points Monday. Many reports have blamed oil for the stock market weakness, but that doesn’t really make much sense. All else equal, low oil prices are a boon to economic growth. And besides, considering how high the Dow has risen, 330 points just ain’t what it used to be — merely a 1.8% move. Back in 2008 the Dow suffered 11 days with losses of 4% or more.Indeed, it’s the pain being borne by energy investors that is dragging down the market. Energy makes up about 10% of the large-cap universe. Yesterday the average energy company was off 4%. Weaker, debt-saddled companies fared far worse. Swift Energy was down 18%, SandRidge Energy fell nearly 13% and Halcon Resources lost 10%.When a commodity falls 50% in price so quickly, bargain hunters emerge. On Monday a self-described “degenerate gambler†and Forbes staffer asked if now was the time to take a flyer on USO — the United States Oil Fund exchange traded fund that ostensibly tracks oil prices — in expectation of an eventual upturn.No, I told him. Don’t buy USO. In fact, if I’m going to bet on oil, that ETF is the last thing I’d buy. It makes far more sense to buy shares in the companies that produce it, for the simple reason that a leveraged commodity producer’s earnings modulate with a greater amplitude than the swings in the price of their underlying commodity. In other words, oil company shares tend to be more volatile than oil itself.
