Here’s How Costco Keeps Their Gas So Cheap (2024)

Updated: Jan. 10, 2023

Costco's gas price is some of the cheapest around—but why? Well, the reason behind their cheap gas is actually quite simple.

The list of reasons why Costco is one of the best places to shop just keeps getting longer. But the one thing that tops the list for the majority of their customers is the low Costco gas price. If you’re looking to save money on gas—or anything car-related, includingtires—Costco is the way to go. In fact, Costco’s gas prices are the lowest in many states. So it makes sense that customers wait in line (sometimes for more than an hour) to fill up their tanks.

With gas prices steadily rising, you may be looking for a little relief on your wallet with some cheap gas. But how can the warehouse chain really keep their prices that low? Do their low prices mean the gas isn’t as good? We did some digging, and have the answer to your questions here. Before heading to Costco, you may also want to try looking into these gas apps that will save you money.

Why is gas so cheap at Costco?

The answer is simple: they just have very loyal customers. To purchase their gas, you have to be a member, and membership sales make up about 75 percent of the chain’s profit. Since new customers are enticed to sign up because of Costco’s cheap gas prices—and other great deals on everything from electronics to food—the chain can afford to price their merchandise and services much lower than competitors.

Having the gas stations right next to the store drives customers inside, too—meaning that every time a member comes to get gas, they’re also likely to drop a few dollars on food or other household goods as well, including theseKirkland items you should always buy at Costco.

Can only Costco members get gas at Costco?

Yes, only Costco members can get gas. If you’re looking to get a membership, there are two types. The Gold Star membership costs $60 per year and includes a card for you and a second card for a partner or someone else you live with. Then there’s the Executive membership, which costs $120. While this membership also includes two cards, these members will get 2% off on qualifying purchases along with access to special savings on vacations, insurance plans, and some other services. Check out these tips on how to get better gas mileage if you’re looking to save even more.

Is Costco gas considered top tier?

You might be worried that because the Costco gas prices are low, the quality of the fuel may not be great. But just like with all of the Kirkland items they sell in their warehouse, the Kirkland Signature Gasoline is top quality. It meets top-tier gasoline standards with deposit control additives to deep clean engine components for the best possible engine performance.

Are there any downsides to buying your gas at Costco?

There are a few downsides to only buying your gas at Costco, depending on how you look at it. As mentioned earlier, there can be long lines. So, if you’re in a rush or your gas light is on, it might be better to fill up elsewhere.

Also, as part of their central mission to keep operating costs to a minimum, they don’t take cash—only debit cards, Costco cash cards, or Visa credit cards. Learn more about the best gas credit cards that can save you money.

One other reason going out of your way for Costco gas might not be worth it is that not everyone has a Costco close to their house. If you find that you’re using up more gas driving all the way to the Costco pumps, saving those extra cents per gallon may not be worth it.

At the end of the day, if you plan out your shopping trip to line up with your gas fill up, it really does pay off to be a loyal customer at Costco, even if that means spending part of your morning waiting in line at the pump—it’s worth it for the cheap Costco gas price. There’s no secret to making the lines shorter, but here are secrets Costco employees don’t want to tell you.


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Here’s How Costco Keeps Their Gas So Cheap (2024)


Here’s How Costco Keeps Their Gas So Cheap? ›

So why is it so much cheaper than the competition? The short answer is that unlike pretty much every other retail business that sells gasoline, Costco doesn't care about making money from its gas pumps. In fact, Costco typically sells its gas at a moderate loss.

How does Costco keep its gas so cheap? ›

Why is gas so cheap at Costco? The answer is simple: they just have very loyal customers. To purchase their gas, you have to be a member, and membership sales make up about 75 percent of the chain's profit.

Does Costco gas really save money? ›

Generally speaking, buying gas at Costco is significantly cheaper than doing so at a traditional gas station. The typical driver can save more than $100 per year. Buying gas at Costco can justify a membership all by itself.

Why is Costco gas not cheap anymore? ›

As gasoline prices fall, Costco does not lower prices at the same pace it raises them when prices are climbing. This allows the company to recoup some of the profits lost by doing the reverse when prices were rising.

How much profit does Costco make on gas? ›

Costco, contrary to some speculation, doesn't sell gas below cost. Galanti says the margin is below the company's overall gross margin which stood at about 10% in the latest quarter. Scot Ciccarelli, an analyst Truist, has estimated that Costco's gas margins are in the mid-single digits.

Where does Costco gas come from? ›

Q: Where does Costco get its fuel? A: Costco buys fuel from major refineries and distributors in each area. All Kirkland Signature™ Fuel is guaranteed, just like the merchandise we sell inside the warehouse.

Why do people prefer Costco gas? ›

Quality gas is important, yes, but so is price. Costco Gas Stations offer consistently low, member-exclusive prices. With the Costco app, you can check Costco gas prices on your phone. On the app, find your local warehouse to see hours of operation, gas prices and more warehouse details.


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