What Kind of Fuel Am I?

[Burning Petard]

OK anybody give me a marketing history lesson? I thank Gob for his pic above. Means they do it in England too--price gas to three decimal places. In normal conversation (at least in my experience) automobile gas prices are talked about in dollars and cents, or Euros and tenth of a Euro. The dollar amount is actually similar; the cents are really hundredths of a dollar

BUT there is actually a NINE added on the end ! Why? Does anybody make change in a tenth of a US cent? In spite of a price listed to THREE decimal points, the sale amount listed at the pump in only two decimals. Does anybody know how or why this is the common practice? Does the machine round off to the nearest 0.01? Or does it always go up to the next penny? Why is it always a nine added?

Why post the price to that precision? If you bought a hundred gallons at once it would only make a difference of a dime total.
100 gal at $3.999= $399.90 100 gal at $4.00 = $400.00

Sure, in wholesale volume all those dimes add up to real dollars, but Is any other retail product priced with similar precision?

snailgate

[BoSoxGal]

Try this: https://www.mentalfloss.com/article/643 ... e-910-cent

[Burning Petard]

Even "Mental Floss" does not understand. To quote early in their explanation:

"Blame the government and the Great Depression. The Revenue Tax Act of 1932 allowed for a federal tax of $0.01 to be placed on gas prices to help offset the national debt. Because gas was priced in pennies in those days, a fraction of a cent was considered reasonable—rounding up would have . . . "

Then MF goes on to give and example of a customer arguing over a fraction of a cent. BUT ! $0.01 IS NOT A FRACTION OF A CENT ! And not even in the Great Depression could a retailer collect 11 and 4/10ths of a cent for a sale.

The only excuse Mental Floss presented is that it is believed by marketers that customers perceive $0.999 per gallon as significantly cheaper than $1.00 per gallon, even if the total cost to the customer is the same.

Yet I have witnessed pennies thrown on to the asphalt by retail customers who hate the inconvenience of total charges that do not end in even dollars, both at gas stations and other retail stores. Perhaps I am beating the dead horse because all this goes away in the cashless, computer posted retail world.
Then perhaps gas stations will proudly post prices such as $5.73654376543219 per gallon All too complicated for the average customer to remember and compare with the price down the street. And they won't need to -- just ask the ap on the phone where the cheapest price is. Will the ap be fooled by a final nine?

snailgate

[Burning Petard]

All this reminds me of the time in my childhood in small town Nebraska where an Uncle volunteered to build me a swing from a tree in his front yard, if my dad would go into town and buy the rope. My dad and I went into a general store that did have rope for sale. My dad asked the price and he was told $N.XY per pound. My dad had never heard of rope sold that way, rather than by the foot. The merchant explained that a single price per pound simplified his inventory. One foot of big rope weighed a lot more than one foot of small rope. The estimated length of rope was selected cut off a big spool, and then weighed, just like an order of produce.

The swing turned out just fine.

snailgate

[Joe Guy]

I'm kinda curious about this too since now I'm noticing most gas stations in my area showing prices like this: 6.05 9/10 per gallon. Are they lying? Is is really .99? Probably is...

[Jarlaxle]

$3.959/gallon Thursday.

Sold my Challenger just in time...

[Bicycle Bill]

Even "Mental Floss" does not understand. To quote early in their explanation:

"Blame the government and the Great Depression. The Revenue Tax Act of 1932 allowed for a federal tax of $0.01 to be placed on gas prices to help offset the national debt. Because gas was priced in pennies in those days, a fraction of a cent was considered reasonable—rounding up would have . . . "

Then MF goes on to give and example of a customer arguing over a fraction of a cent. BUT ! $0.01 IS NOT A FRACTION OF A CENT ! And not even in the Great Depression could a retailer collect 11 and 4/10ths of a cent for a sale.

It is not rounded up until the end of the sale, same as is done with sales tax when the tax rate is something-and-a-fraction percent.  To use your Great Depression pricing of 11.4 cents per gallon as an example, one single gallon WOULD round up to 12 cents per gallon; but ten gallons would wind up costing $1.14, not $1.20.

And to prove this, the next time you fill your tank, carefully pause your pumping once exactly 10.000 gallons has been dispensed.  If the cost per gallon is, let's say, $4.29⁹, the digital read-out should show the amount due as $42.99 instead of $43.00.  And if your tank is large enough and you pump TWENTY gallons, your total cost will be $85.98 instead of $86.00.  

So to repeat ... while one gallon may, effectively, round up from $4.29⁹ to $4.30, it is not cumulative on each and every gallon — just like a $1.00 purchase in my part of Wisconsin, which has a 5.5% sales tax, rounds up to become $1.06; but a purchase of $2.00 is taxed at 5.5% of the TWO DOLLAR sale, so I pay $2.11 instead of $2.12.

-"BB"-

[Methuselah]

We moved from the East Coast to CA before additives were added to gasoline to reduce smog. The smog was too noticeable and had effects such as school kids weren’t allowed to play outside on bad days. I was riding on a bus one day where it was so noticeable and uncomfortable that I started thinking about maybe moving here was a bad idea, it could reduce my life span and damage my kids. The additives really reduce smog to a tolerable level. I’m glad to pay the extra tax on gasoline that pays for the additives. If gas costs more than in other states there’s a good reason for that.
On a related subject, “rounding up” means changing 49.4 to 49. but 49.6 to 50. There must be a different phrase to describe what is done to gas prices.

[Bicycle Bill]

On a related subject, “rounding up” means changing 49.4 to 49. but 49.6 to 50. There must be a different phrase to describe what is done to gas prices.

No, that's just rounding.  "Rounding up" means just that ... going to the next whole integer no matter how much (or how little) over the current integer one is.
It's like opening a fresh gallon jug of milk to use perhaps a cupful of it in a recipe.  While you've used far less than the entire bottle, the full gallon has nonetheless been opened and accessed.

-"BB"-

[Methuselah]

The two terms are “rounding off” and “rounding up”, but enough of that. A more interesting question is why do the oil companies bother with fractional prices? It makes their book-keeping and sign maintenance more expensive with no benefit that I can see. I just drove five miles on a major boulevard near me past ten gas stations. Their prices varied by fifty cents per gallon for the lowest grade gas. The customers are insensitive to differences of a few dimes, not a small fraction of one penny. Are fractional pennies on prices a bad practice that has just gotten out of hand, or is there something more subtle going on here? [update] Just read the article referenced by BSG above. It explains the goverment's role in making this happen. Strange story. I wish the gas companies would throw their weight around and get this practice ended. It isn't helping them any.

[Bicycle Bill]

Maybe it's just a case of "because we've always done it that way."

-"BB"-

[MGMcAnick]

It's probably on it's way down - somewhat.

That's the game that the oil industry plays; they latch onto whatever handy excuse to spike prices, suck up as much as they can in windfall profits, then ratchet prices back down before most people seriously contemplate changes that would permanently decrease their consumption.

Up like a rocket, down like a feather.
I paid $3.309 Saturday afternoon at the same discounted station that was $3.259 when this discussion started. IIRC it peaked at $3.649 there a couple of weeks ago. KS was said to have the cheapest gas in the country on several news reports.

[Jarlaxle]

I pumped$38 worth of gas into my car. A roller skate Hyundai Accent. Blarg.

[ex-khobar Andy]

Here in Louisville it's around $4.29 at the places I see but according to Gas Buddy you can find it for around $4.10 (or cheaper at member places like Costco). My neighbor was at Fort Knox area today (40 miles or so away) and she said it was $3.79.

Gas station owners are forever telling us they make about 5 cents per gallon and that is pure bullshit.

[Jarlaxle]

No, it's not. Their profits from the convenience store.

[BoSoxGal]

There was a very good piece on Sunday Morning on how the oil prices get set and who makes the most profit. The last guy to make a dime is the station owner.

[Joe Guy]

I don't think gas station owners make much from gas. That's why they have other businesses on site. Nowadays it's mostly small grocery 7/11 type stores that make the money. In the old daze most gas stations were also garage/repair shops. Many still do but not as many as way back when....

[MGMcAnick]

I pumped$38 worth of gas into my car. A roller skate Hyundai Accent. Blarg.

At least you're not feeding the Challenger anymore. Spring is (supposedly) coming so you can ride your bike.

[Jarlaxle]

I pumped$38 worth of gas into my car. A roller skate Hyundai Accent. Blarg.

At least you're not feeding the Challenger anymore. Spring is (supposedly) coming so you can ride your bike.

Liked the car, but got an offer I'd be stupid to not take.

[Joe Guy]

I just drove by a Chevron gas station about 2 miles from home and the price of regular unleaded (87 octane) is $7.19/gallon. Which means that if I went there with my Toyota Tundra with a nearly empty fuel tank and filled up, I'd need to pay about $187.00.