Truths, Tidbits and Tricks: Why .9-cent for gas?

Susan EspirituTruth

Those  Truths we never question? $2.82.9 a gallon for gas.  My husband did. “What is 9/10 of a penny?” he asked. Hmm… I don’t know, but every gallon of gas has 9/10 of a cent added to it. What difference could a fraction of a cent make in an economy where a penny doesn’t even make dent in a debt owed?

Don’t blame Weigel’s, Casey’s or wherever you fill up, because it turns out, the odd pricing is from a law in place since 1932. In 1932, when our country was in the throes of the Great Depression, a penny was valuable, not like today when passersby just look to see if one is heads up or heads down for luck or not. In 1930, a gallon of gas was about 20 cents and in some parts of the country as low as 10 cents.

In 1932, the Revenue Act of 1932 was passed, allowing for the first federal gas tax at the rate of 1 cent per gallon which was a heavy tax for the day, increasing the prices by as much as 10%. To put that first tax in perspective for today’s dollars, a $3 gallon of gas today would have a 30-cent gas tax at those rates. We currently pay 18.4 cents per gallon in federal gas tax.

Gas station owners who had to pay the tax to their suppliers either had to forego the tax to customers and face potential catastrophic loss of profits, raise prices by a full penny which was a lot in 1930’s, or increase prices by less than a cent and pay the difference which softened the burden for both the retailer and the customer.

Thus the .9 of a cent per gallon was adopted and it proved to be an effective Trick to the psyche, convincing us gas was cheaper than the full penny.

The fraction of a cent adds up and is nearly universal.  Iowa banned the practice in 1985 but repealed the law a few years later due to the loss of revenue.

Next time you gas up, know that you know a Tidbit that may be very trivial but historical about the country’s development of pricing one of our very needed resources.

Remember, if you have a wealth of trivia knowledge, you will never be at a loss for words:


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