Half Pricing

A method used for pricing motor fuel in retail gasoline stations.

Half-pricing first appeared in the 1970s when many of the original mechanical computers installed in retail pumps were capable of displaying a maximum price of only 49.9 cents a gallon. Following market disruptions created by mideast oil embargoes in the 1970s, the price of gasoline began rapidly to climb in the U.S.

The retail price soon reached a level above 50 cents a gallon. Since most existing mechanical computers, however, could not display a price at this level, it became necessary to adopt temporary emergency measures.

The weights and measures agencies in the various states agreed to a half-pricing arrangement. It worked this way: If the posted market price at a particular station was, say, 60 cents a gallon (tax included), the pump computer was set to reflect a per-gallon price of 30 cents. Then, when a purchase transaction was completed, the motorist simply paid double the amount shown on the meter.

Some oil marketers replaced 49.9-cent mechanical computers with computers that would display a maximum price of 99.9 cents. When the per-gallon price moves above the next dollar increment, half-pricing measures usually are temporarily reinstituted.

 


« Return to Wiki Index