# Fuel for Thought

This morning I happened to see a gasoline-station employee manually change the prices displayed in large numerals on the station’s sign post.  The per-gallon prices before the change were \$3.01 9/10 (for 87 octane); \$3.12 9/10 (for 89 octane); and \$3.25 9/10 (for 93 octane).

The prices for the 89- and 93-octane blends fell by one cent each (that is, to \$3.11 9/10 and \$3.24 9/10, respectively).  But the price for the 87-octane blend fell by two cents — to \$2.99 9/10.

At first I wondered at this difference, and then — discussing the matter with my wife, Karol — realized that if the price of the 87-octane blend were cut by only one cent, the new price of that blend would have been \$3.00 9/10.  Karol and I agree that we’ve never seen gasoline priced with two zeros immediately after the decimal point — that is, we’ve never seen gasoline priced at \$1.00 9/10 or at \$2.00 9/10 or at \$3.00 9/10.

My reading of the literature on the phenomena of (what to call it?) "99-cent pricing" is that a good, compelling explanation has yet to be found.  But unlike some of my more hyper-rationalist economist colleagues, I don’t dismiss the psychology-based explanation that many consumers in fact act as though there’s a larger absolute difference between prices of, say, \$2.99 and \$3.00 than between prices of \$3.01 and \$3.02.

So here’s a threshold question: Am I alone in not being able to recall ever seeing gasoline priced in whole-dollars (plus the 9/10)?