Why Do We Still Have Increments At The Gas Pump?

Wednesday, July 13, 2022 - by Dave Fihn

I often wonder why gas stations still charge fuel in tenth-of-a-cent increments. You don’t buy unleaded for (today) $3.96 a gallon. Look at the sign and the pump. You’re purchasing fuel at $3.96 and 9/10s. $3.969 per gallon. Now, if you think the nine-tens of a cent added to every gallon exists because oil companies thrive on profit, you would be right. But that’s not how it started and doing it today makes no sense.

 

  Early last century, the dollar was worth a lot more than it is today.

In fact, a penny could purchase a lot more than today – 20 times more. So unless you were purchasing way more than one stick of sugar candy you couldn’t get any change back or the diet was off the wagon. But there was a way of paying lesser amounts than a penny. It was called the “mil.” Latin for one-thousand, it was one-thousandth of a dollar, or one-tenth of a penny. Suddenly, conservative consumption of rock candy was within reach.

 

  And while gas was relatively inexpensive, a penny’s-worth of gas could mean the difference in a full tank and an over-filled tank. The federal government jumped into the fray by adding fuel taxes and the oil companies started selling fuel based on mils. As the dollar inflated and the cost of fuel got higher, mils were no longer necessary (this is where the profit motive stepped-up a gear) and oil companies always charged, and continue too. You never look at the nine-tens when a full tank can now costs a quarter of your mortgage payment.

 

  My math is poor but my arithmetic is passable. If your tank takes 20 gallons, 20 x .9 = 18 cents. Multiply that times 50 fill-ups a year and it’s only $9.00 a year. So, I haven’t knocked you over yet? Multiply $9.00 a year times 300 million cars and that paltry sum only comes to $2 billion 700 million dollars-worth ($2,700,000,000) of nine-tenths of a cent.

 

  Gas stations don’t buy their fuel from distributors this way, nor do the distributors charge like that, and the oil companies themselves don’t charge any other way than by the long-ton (or whatever awesome weight or measure they use). Is it realistic for your local gas station to be charging you an automatic 9/10’s-of-a-cent more than necessary?

 


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