Fractional Gas Pricing
The industry wide 9/10 cent pricing for a gallon of gas is price collusion and a deceptive marketing practice. It is not possible to purchase one gallon of gas at the advertised price (this happens nowhere else in commerce).
Fractional cent pricing other than 9/10 cent can easily be programmed into a gas-pump’s computer. There is a 15 to 10 bias toward rounding up (rounds the total cost of the purchase up to the next whole cent for multiples between one and five gallons (i.e. 1, 11, 21, ... gallons) and rounds cost down to the next whole cent for multiples between six and nine gallons (i.e. 6, 16, 26, ... gallons).
9/10 cent motor fuel pricing was banned by Iowa state law from 1985 to 1989 before special interests reinstated the deceptive pricing practice.
There is pending legislation in a number of states (not Texas) trying to deal with this issue, but I am tired of waiting on the government to do something. This has been going on for about 70 years and it is time to stop it.
I asked Chevron this:
To: COMMENT Subject: pump price Dear Sir, Madam: Who designed the first pump? Also, why was the pump designed with the pricing the way it is. That is, x amount and 9/10 ths of a cent? Why do pumps still use this today?
I got this response:
Thank you for contacting Chevron Corporation about your research project. Due to the large volume of mail directed to Chevron, we cannot provide individual answers to questions related to individual research projects. Here are some recommendations on how you may be able to find the information you are looking for:
Other Web sites that may be useful for your research are:
American Petroleum Institute
Department of Energy
American Gas Association
California Air Resources Board
Lundberg Survey (for gasoline prices)
None of the individuals I contacted were able to answer my questions. I got the same run around from BP, Texaco, and several others.
I asked Shell how I could get a gallon of gas at the advertised price. This is their response:
Other than just pumping til the gallon amount is at 1.000 we are unsure quite how to get exactly 1 gallon of gas. Please contact our lubricants customer service department at1-800-468-6457 as they might be able to offer better further assistance.
Shell Customer Care
I talked to representatives from every major oil company and no one could answer the question, "How do I get one gallon at the advertised price."
I asked this of the major pump manufacturer Gilbarco:
Dear Sir, Madam:
Who designed the first pump? Also, why was the pump designed with the pricing the way it is. That is, x amount and 9/10 ths of a cent? Why do pumps still use this today?
I was sent their catalog and had a phone conversation with a representative. He said that all the pumps could be set very easily at the pump to any price. That originally, the mechanical pumps were limited to tenths, but for the last 70 years or so the practice of fractional pricing has continued.
In Canada, gas stations use fractional pricing to battle down to the last fraction of a cent! For instance: 3.99 and 1/10th.
Fractional gas pricing is a deceitful practice because it is not possible to actually buy a gallon of gas at the quoted price and because of the rounding up bias.