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”
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FAQs
Its gas stations are usually on the most visible part of its property. Simply put, you have to be a member in order to buy gas at Costco, and its gas stations are a daily reminder of that to traffic. Costco makes the bulk of its profits on membership fees -- not on markups inside its stores.
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.
Does Costco make money on their gas? ›
Gas has actually been a profit center for Costco, but Galanti defends that because of what the company does with much of the money it makes selling gas.
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.
Where does Costco source its gasoline? ›
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.
Does Costco use low quality gas? ›
As our valued member, you expect Costco to always offer the finest quality products at the best possible price. Our fuel is no exception. Costco has closely studied fuel additives and engine deposits, and conducted extensive engine tests at nationally-recognized laboratories.
How does Costco keep prices low? ›
Placing huge orders allows the company to work with its partners to bring the cost of the item down. Costco's vendors can go to their suppliers to get better prices on ingredients, packaging, and anything else that goes into the item. Costco also uses its Kirkland Signarture brand to keep prices low.
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.
What is Costco's biggest profit? ›
The answer is surprising: Costco makes a profit mainly from membership fees. To shop at Costco, one must possess a membership. This permits Costco to do what no other grocery store could previously do, which is sell their items at a price so low that they break even.
Why does Costco have a gas attendant? ›
Our attendants work at the fuel islands so they can respond immediately to any safety or environmental issue. All Costco fuel stations have corrosion-proof double-wall underground storage tanks and piping. Everything underground is continuously monitored for leaks via an electronic monitoring system.
It is because their large, Walmart-sized warehouse attracts a lot of customers. They have 100 million members worldwide. Because people need gas every week. Because Costco sells the lowest priced gas in town.
What are the benefits of buying gas at Costco? ›
Costco gas is offered at a great price
Although the exact amount of savings you'll get varies based on your location and the specific club you're shopping at, you'll typically save around $0.20 per gallon at Costco according to most online reports. Most cars hold between 10.5 and 18.5 gallons of gas.
Who owns Costco? ›
Costco is mainly owned by institutional investors, who own over 70% of shares. The largest shareholders in December 2023 are: The Vanguard Group (9.10%) BlackRock (6.90%)
What gas stations sell top tier fuel? ›
Top Tier Gasoline Worth the Extra Price, Study Shows
| See a full list of Top Tier retailers. | |
|---|
| Conoco | Ranger Fuel |
| Costco/Kirkland Signature Gasoline | Reeders |
| CountryMark | Rutter's |
| Diamond Shamrock | Shamrock |
17 more rowsJun 26, 2024
You'll know you're filling up with the good stuff if you spot a small green sticker on the pump that says “TOP TIER Detergent Gasoline.” As of early 2022, the following stations sold Top Tier gasoline in the U.S.: 76, ARCO, Aloha, Beacon, Breakaway, CITGO, Cenex, Chevron, Conoco, Costco Wholesale, CountryMark, ...
Is Costco worth it for gas? ›
That's because Costco loyalists know there's no better place to buy gasoline than at the wholesale giant's pumps, which regularly undercut the competition. “You save approximately 20 cents a gallon at Costco over other local vendors,” says David Schwartz, who together with his wife Susan authored “The Joy of Costco”.
What is the benefit of getting gas at Costco? ›
Costco gas is higher quality than many competitors
In fact, the quality of Costco's gas is another big reason why you should fuel up at the warehouse club. Kirkland Signature Gasoline is TOP TIER™ certified, which means it meets stringent performance standards.
Why is the Costco gas lines always so long? ›
“Consumers see this as a customer-friendly convenience, but in truth, they help reduce congestion at the pumps, which allows more cars to pass through the pumps, which allows Costco to sell more gas,” says Bines. “It's a win-win, but only because it first benefits the consumer.”
How much cheaper is Costco fuel? ›
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.
