The E-Sylum:  Volume 7, Number 13, March 28, 2004, Article 11

FRACTIONAL GAS PRICING IRKS MOTORIST

  A reader's letter published in the Pittsburgh Post-Gazette on
  Friday, March 26, 2004 addressed the topic of gasoline
  pricing in the U.S., and the answer touched on coins (or
  lack thereof), politics, taxes, and tradition:

  "Q: I was wondering if you could address the issue of
   gasoline pricing. No other businesses that I know about
  charge by the tenth of a penny. Doesn't it seem deceitful to
  charge an amount for a gallon of gas that is impossible to
  pay?  I can buy a gallon of milk or ice cream, but not gas!
  It just rubs me the wrong way. Can you look into this
  practice?  -Paula Hrabos, North Fayette"

  A: Wow, Paula. They say it's the little things in life that
  matter most, but I don't think the person who coined that
  phrase had anything quite this little in mind.

  Still, your disdain for the way gasoline is priced was shared
  by at least one prominent person -- the late Sen. Joe Coleman
  from Iowa.

  He thought the practice was deceptive, too. So in 1985, he
  pushed through legislation that barred stations in Iowa from
  pricing gas in fractional cents. That meant that gas selling for
  $1.199 a gallon -- the approximate price at the time -- had
  to be rounded up to $1.20, or rounded down to $1.19.

  Violators were threatened with a $100 fine and a month in jail.
  "We don't have a one-tenth of a coin," Coleman explained at
  the time. "It just bugged me for years."

  Four years later, however, the law was repealed -- some say
  deceptively because the amendment was never discussed in
  the Iowa Senate -- and the sneaky little nine sneaked back in."

  "Still, as Paula pointed out, an argument can be made that
  fractional-cent pricing is false advertising. There's no way to
  pay or get change for a fraction of a penny, so customers
  can't buy exactly one gallon of gas at the advertised price."

  "For its part, the gasoline industry seemed stumped.

  "That's an interesting point that I don't have an answer to,"
  Dan Gilligan, executive director of the Petroleum Marketers
  Association of America, said of the false advertising charge.

  Fractional pricing "has never been an issue that's garnered
  much attention," he said.

  He said the most credible theory he's heard explaining why
  gas stations started using fractional cents is because it reflects
  the way federal and many state gasoline taxes are levied.
  Currently, for example, the federal gas tax is 18.4 cents a
  gallon. (When the tax was first imposed in 1932, it started
  out as a flat 1 cent per gallon and rose to 1.5 cents a year
  later)."

  "But don't count on any changes in the way gas is priced any
  time soon, Gilligan said. The idea has never even come up at
  any of the many industry meetings he's attended.

  "Maybe your story will generate some debate," he said.

  In case that doesn't work, Paula, I have an idea.

  According to the fine print, manufacturers' coupons typically
  have a cash value of 1/100th of a penny.

  Maybe someone could collect 90 of them and try using them
  as exact change for a gallon of gas."

  To read the full story, see: Full Story

  Wayne Homren, Editor

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