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.
Sources:
- CNN: “Here’s why gas is so cheap at Costco and Walmart”
- Costco: “Kirkland Signature Gasoline”
Juan Llauro/ShutterstockThe Best-Selling Item at Costco
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FAQs
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.
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.
Does Costco make money on their gas? ›
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. Why would Costco do this? It's not an act of charity.
Why do people like Costco gas so much? ›
It's good for your car
The fact that gas is cheaper at Costco doesn't mean it's lower in quality. The company offers Kirkland Signature gasoline, which is formulated to improve vehicle performance and fuel economy. Costco says the gas also reduces emissions, making it better for the environment.
What is the best day to buy gas at Costco? ›
Gas stations can get busy (avoid weekends)
Avoid weekend fill-ups if you can. Buying gas on a weekend could be a nightmare, as waiting times could take hours. To avoid this, the best time to get gas at Costco is on weekdays between 10-11 in the morning.
Is Costco gas really top tier? ›
Costco is listed as a TOP TIER™ gasoline retailer. Find out more at www.toptiergas.com. Kirkland Signature™ Gasoline contains five times the EPA detergent requirement in both regular unleaded and premium grades, and is formulated to clean your engine and help your vehicle run like new.
How does Costco keep gas low? ›
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.
What company does Costco get its gas 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.
What is Costco's biggest profit? ›
So all the money that Costco earns is mainly membership fees, as their merchandise is either break even or a tiny profit margin and many of their items are in the red.
Does Costco gas pay for itself? ›
Using a little back of the envelope math, David and Susan conservatively estimate that a member would only need to drive 7,500 miles per year while exclusively buying Costco gas before their membership pays for itself.
Lastly, the gas prices are pretty great at Costco.
I live a nomadic life so I drive a lot and always look for the cheapest gas. Most recently I saved 38 cents a gallon at Costco compared to the other gas stations in the area. That adds up to me saving a few hundred dollars a year on gas by choosing Costco.
Why does Costco have a gas attendant? ›
Trained and certified Costco attendants stationed on the fuel islands help make our fuel stations safe places to buy fuel. Our employees help customers in a variety of ways, including aid to anyone requiring physical assistance in fueling their vehicle.
What is the benefit of getting gas at Costco? ›
Buying gas at Costco can save you money -- typical savings are around $0.20 per gallon. It makes stopping at the warehouse club more convenient -- you can buy groceries and fuel up your car. The higher quality of Costco gas could help your vehicle run more smoothly.
How much profit does a gas station make per gallon of gas? ›
Retailers Make Very Little Selling Gas
Generally, the markup (or “margin”) on a gallon of gas is about 15 cents per gallon (gross profit before expenses). Factoring in expenses, which include rent, utilities, freight, labor and credit card fees, a retailer is left with about 2 cents per gallon in profit.
What day of the week is gas usually the cheapest? ›
Buy Gas on Monday or Tuesday
Be strategic about the days you fill up at the pump. “For gas, Mondays and Tuesdays tend to be the cheapest days to fill up your tank as demand is lower at the beginning of the week,” Anderson said.
What makes Costco gas different? ›
Deposit control additives - Gasoline
These additives are designed to minimize engine deposits that can affect vehicle performance and emissions. The various proprietary deposit control additive formulations are the main difference between brands of gasoline. All gasoline at Costco contains deposit control additives.
Is Costco fuel cheaper? ›
Drivers filling up at Costco will generally save more than £6.50 a tank compared to a supermarket. RAC fuel spokesman Simon Williams said: “Drivers who aren't fortunate enough to be members of Costco will no doubt be horrified to see just how cheaply fuel can be sold.
Where does Costco gas come from? ›
It could be any one of dozens of different refiners Depending on the locale of your Costco. Just like every other gasoline retailer they do not have their own specific supplier at every location.
Is Costco fuel good? ›
Good station operation and maintenance means the fuel is filtered and that contaminants, such as sediment and water, do not find their way into our members' vehicles. Costco fuel stations are well-maintained by our capable attendants so you may be confident that the fuel going into your car is clean.
