Opinion: Gas prices explained


Commentary by Ward Degler

Have you ever wondered why gasoline prices are always given to 9/10th of a cent? Me, neither, until I saw an antique picture of a gas station listing fuel at a flat 19 cents a gallon. It looked odd. Not the 19 cents, but the missing 9/10ths cent at the end.

Apparently, there is a guy in Three Lakes, Wis., who has a petroleum museum. Ed Jacobsen, aka, Jake the Oil Guy, operated his own gas stations for years and, fed up with hearing jokes about ethyl and high test, hung up his tire gauge and opened a museum filled with old gas pumps, oil cans and tons of trivia about the petroleum industry.

Getting back to that 19-cent gasoline, Ed explains it this way: Gasoline started out at 19 cents a gallon back when a new car cost $300 and boasted a top speed of 35 mph. Then the government added 3/10 of a cent to each gallon to pay for roads. The fuel industry simply tacked it onto the price at the pump. Now gas was 19.3 cents.

It didn’t take long for gas station operators to realize the government wasn’t going to stay happy with just 3/10ths of a cent, so they boosted the add-on to 9/10ths of a cent. They also realized that 19.9 cents looks a whole lot smaller than 20 cents.

Today, we are used to the 9/10ths add-on, and since fractions that small don’t show up on our credit cards, we pretty much ignore it. No big deal. Except, it is a big deal,  after all.

Say we fill up at the pump, 15 gallons at $3.29.9 per. The 9/10ths cent adds 13 cents to our cost. And since Americans buy 178 million gallons of gas every day, that tallies up to a whopping $500 million a year.

One more thing Ed likes to point out. Folks whine all the time about the price of gas. Factor inflation into the mix and that 19-cent gasoline would cost $2.20 per gallon today. Add the fact that when it was 19 cents our cars only averaged about 10 miles per gallon. Today, we get at least 20, which boosts the per-gallon price to $4.50.

Turns out any time we can gas up today for $2.19.9 a gallon, it’s still about the same as 19.9 cents.

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