simplify the economy | Why is the price of gasoline shown in ten cents?

Every Saturday, one of our journalists, accompanied by experts, answers one of your questions about the economy, finances, markets, etc.

Posted at 6:00 AM

Karim Ben Issa

Karim Ben Issa
Journalism

Gasoline price is $2.22 per liter. I say roughly, because it’s actually $2,219. I think it’s time to get rid of the meager one-tenth of a hundred. I would be very curious to see how the professionals in this field can explain to us how pumps can manage a measurement that is not even a drop.

Luc Degarlaise, Saint-Amable

Gasoline is definitely not a product like any other. He’s probably the only one offering a price per unit, per liter, while we buy dozens of them with an accuracy of tenths of a cent and that includes all taxes. Its other peculiarity is that consumers are very sensitive to price differences between service stations, to a level that limits irrationality.

Carol Montroy, vice president of the Canadian Fuel Association, explains that for decades, when a liter of gasoline cost less than $1 and was offered in cents, price wars amounted to tenths of a cent.

“Studies have shown that consumers change neighborhoods or go further for a half-cent difference. I don’t know of many other businesses that display their street prices on 15-foot signs, and who shop with your car…”

Today’s “extra”

This accuracy remained to a tenth of a cent even when gasoline topped a dollar in July 2005 in Montreal. July 14 warned on the front page of the business section of “Gasoline” about its high price and will remain so Journalism Journalist Helen Barrell.

Today, at hovering around $2.20 per liter, “the third decimal digit becomes unnecessary, agrees Carol Montroy. But the plates allow it, so they stay in place.”

Consumer, he has not changed despite the higher prices: he is very loyal to a particular brand, he notes.

People will say, “I’m looking for the best price, it’s the same product anyway.” Yes, companies will promote their own additives, but in the end, they all put together a useful additive for the engine.

Carol Montroy, Vice President of the Canadian Fuel Association

The only exception is gas stations with a pump, which are becoming rare and generally associated with mechanical services. “People accept that prices are a little higher, and there are customers who appreciate that and don’t want to get out of their car to fill in the blank.”

Global price reversal?

La France est un cas intéressant pour cette fameuse troisième décimale, qui n’est apparue qu’avec l’adoption de l’euro en 2002. L’économiste Erwan Gauthier a publié en 2015 une étude qui démontre l’aspect marketing de psychologique This app. After analyzing 8.5 million prices from 2007 to 2009, he found that 60% of them ended up with “0” or “9”, which is clearly not random.

This exercise was justified by the fact that some analysts pointed out that this third decimal number was in fact the path of futures contracts for gasoline and fuel in general. In fact, these cycles rise to the third rank, and sometimes even reach the fourth decimal place. Gasoline, for example, was selling Friday morning at $4.1506 a gallon, and WTI crude oil at $119,390 a barrel.

“It’s always been set up like that, and even with the prices going up, it’s still going, says Carol Montroy. I think it’s mostly imitation.”

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