Either make it 9 cents or round it to to the next penny. That seems rather ridiculous — right?!? Why not just round up the price another one-tenth of one cent and call it even?
The tax was supposed to expire in , but, as so often happens, Congress voted to extend the tax and raise it by half a cent instead.
Around this same time, gas station owners began breaking down the price of a gallon of gas by fractions of a cent, leading to the generally accepted theory that it was the fraction of a cent tax that resulted in gas station owners almost universally beginning to price their gas this way.
Today, federal gas taxes continue to add up to fractions of a penny. For instance, according to the U. Back in the day when the fraction was instituted by the federal govt, they were one in the same, now most oil producers do not have refining and distribution operations called downstream. They are also the ones who are quick to raise prices when oil prices increase and slow to decrease the when they fall, creating additional wedges of profit. The oil companies sell oil to the refiners at a daily spot price created by traders at an exchange who purchase and sell futures contracts of crude oil, and thus have no micro control over the prices they receive for their oil.
I appreciate the correction, C. Stanley , as I am far from knowledgeable about the topic of oil and petroleum in general. By the s, they had advanced to a level where they could dispense fuel to the fraction of a penny.
By pricing to a fraction of a cent, retailers could more easily adjust prices to lure customers. A historical picture of a Maryville Oil Co. Marketing Takes Over Over time, fuel retailers evolved to pricing at 0. The reason is simple marketing. Retail experts have long known that goods prices slightly less than those priced at a whole number sound far less expensive.
Infrastructure advances also contributed to the practice of pricing gas at 0. It became even more common to see retailers price at 0. In August , he issued temporary freezes on wages and prices, and he reinstituted these freezes in June Retailers lost control of their ability to set their own prices at the pump, which were instead calculated by a government-mandated formula that often led to pricing that had other fractional amounts, such as 0.
Frustrated consumers reacted negatively to these unusual prices and soon the 0. Exceptions to the Rule Since the s, 0. But there have been a few exceptions. In , the state of Iowa banned fractional pricing for gasoline. Prices had to be set in full cents. The law was repealed in A Palo Alto, California, retailer experimented with full-cent pricing in , and the results were surprising.
He told the San Jose Mercury New s that he did it as an experiment—but one that did cost him. And, Davis noted, no one noticed the difference. Worse, when customers were alerted that prices did not feature 0. Davis quickly abandoned his experiment.
Because fuel is sold in litres, a one-cent adjustment is the equivalent to a 4-cent-per-gallon change, so retailers may elect to price in other increments to lure price-sensitive customers.
Prices often end in 0. On a related note, Canada stopped production of the penny in All retailers now round the transaction to the nearest nickel for those paying by cash. There also are U. In , Mission Market Fullerton, CA said goodbye to the penny—rounding up or down prices to the nearest nickel.
No One Has an Advantage Overall, the average fuel retailer today makes about 10 cents per gallon selling gas. That 0. Consumers, meanwhile, get exactly what they pay for at the pump, and the dispensers perform some simple rounding. If the final price ends with a fraction of a cent below 0. This was especially true as the economy contracted dramatically during the Great Depression, as explained by the chief economist of the American Petroleum Institute, John Felmy.
In , Felmy told Reuters that gas prices fell to ten cents during the Great Depression and, at the same time, the Federal government instituted a 1. The fractional-cent tax has become entrenched over the years; the Federal gas tax is In turn, gas retailers used it to their advantage. Bonus Fact : Want to know widely gas prices vary in the United States?
0コメント