Ever Wonder About That Extra 9/10 on Gas Prices? Here’s Why It Exists

Whenever I talk about the price of gas at the pump, I make the mistake of ignoring the 9/10 tacked onto the number I see on the sign and assume a price that’s one cent lower than the actual price. Most people do that, because the fraction is written in small print and seems insignificant when you’re talking about prices in the range of $4-$6 per gallon. It wasn’t insignificant back in the 70s and before, however, when gas cost less than $1 per gallon.

Gas stations aren’t the only places you see fractional pricing; retailers of all kinds do too. Setting the price for an item at $24.99 instead of $25 (for example) tricks consumers into thinking the price is less than it actually is. There’s an element of that in fractional gas prices, but it’s a bit more complicated. So why did gas stations use this pricing then, and why do they do it now? We checked in with fuel management specialist Eliot Vancil and automotive journalist Michael Satterfield to find out.

The Quick Answer

An obvious reason for fractional prices is that it makes money for the retailers. “A single station which fills 300,000 gallons monthly is getting a yearly increase of more than $32,000 on that one sub-cent increment,” says Vancil. “Retail margins are low, usually five to 15 cents per gallon of regular unleaded. So that fraction is not a rounding quirk. It is an intentional line margin which most customers will never consider to inquire about.”

Customers never enquire about fractional prices because the practice has been around so long, and at this point, is probably based on habit. Consumers just expect 9/10 pricing for gasoline, and stations rounding up to the nearest cent could face backlash. This actually happened. Twice.

According to Advancing Convenience & Fuel Retailing, the state of Idaho banned fractional pricing in 1985, and levied a $100 for doing it. That ban was repealed four short years later. In 2006, a retailer in Palo Alto, CA began setting prices without the 9/10 addition as an experiment, advertising $2.99 per gallon instead of $2.999. Some customers assumed he had rounded up the price. Others had a different question: if he had reduced the price, why didn’t he reduce it more? In the end, because of the loss of the extra 9/10 cent in revenue, this experiment ended up costing the retailer about $23 a day, based on 2,500 gallons sold.

Where Did 9/10ths Pricing Start?

Pricing to 9/10ths of a cent is known as mil pricing, which goes back to the Coinage Act of 1792. A mil is 1/1000th of a dollar (a cent is 1/100th; mil, cent…get it?), and mil pricing is still common for property tax assessments, stock issuances and utility bills.

Mil pricing for gasoline began with the Revenue Tax Act of 1932, which established a 1/10th-cent (one mil) per gallon excise tax on gasoline, which has subsequently increased to 18.4 cents per gallon. During the Great Depression, gas prices fluctuated from 20 to 30 cents a gallon, and in some places they were as low as 10 cents a gallon. Adjusting prices up and down by a full cent amounted to a 5 to 10 percent change in the price of gasoline, so to calm customers’ nerves, retailers made adjustments in mils rather than full cents.

Why Gas Stations Still Use it Today

“Initially,” says Satterfield, “mil pricing was just the gas stations passing on the cost of the new tax without raising gas prices by a full cent. The industry just never got away from it; today, it’s a psychological play, just like the $1.99 vs $2.00 in retail.” The practice really took hold in the late 1950s with the development of the Interstate system. Gas stations along major highways would advertise the price in 9/10 of a cent, and drivers speeding by would look only at the first two numbers.

In 1971, President Nixon instituted freezes on prices and wages, and a government-mandated formula set fractional gas prices like 0.3 or 0.6 cents. This proved unpopular with the public, and 9/10 pricing returned. It has been the rule ever since in the United States, where gas is sold by the gallon. In countries that sell gas by the liter, such as Canada, it’s more common to see prices with fractions like 0.3 and 0.7 cents, because the fractional rate has more of an impact on the final price when you buy gas in smaller quantities.

Why Not Just Round To The Nearest Cent?

The main reason for 9/10 gas pricing is probably psychological marketing. $2.999 sounds cheaper than $3.00, and rounding up to the nearest cent could drive customers away. Beyond that, the extra 9/10 of a cent tacked onto gas prices is a source of revenue for retailers, who typically have very thin profit margins.

FAQ

Why is gas one of the only things priced in fractions of a cent?

The fact that fuel is, as Vancil explains, the only consumer product in the United States to be highly priced below the cent, goes back to the Revenue Tax Act of 1932. That Act established the excise tax that established the practice of mil pricing for gasoline and not for any other consumer goods. Curiously, adds Vancil, that Act was never intended to be permanent.

Could gas stations legally drop the 9/10?

No federal law prevents gas stations from pricing in full cents, but for reasons already discussed, stations are reluctant to do it. They would lower their profit margins and lose psychological advantage of fractional pricing.

About the Experts

• Eliot Vancil is CEO of Fuel Logic LLC, a Dallas, Texas-based company specializing in comprehensive fuel management solutions, including delivery of various diesel types and gasoline nationwide.
• Michael Satterfield is an award-winning journalist, branding expert, and founder of The Gentleman Racer — a leading online publication covering automotive culture, travel, and lifestyle.

Sources

• Advancing Convenience & Fuel Retailing (NACS): Why Gas Is Priced Using Fractions of a Penny; (2025)

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