Costco might be best known for rotisserie chicken and bulk buys, but it has also become the best place to buy gas.
Costco gas prices are typically below the regional price. Every time you go you can find gas prices cheaper than everyone else’s by simply shopping at Costco. How does Costco sell gas so cheap, and what is the cost in total?
In this article, I cover why Costco gas is so cheap, I detail a handful of reasons to fill up at Costco, and point out some downsides you may not have thought about.
Why Is Costco Gas So Cheap?
Costco gas is cheap due to the volume they sell as a follow-through with their marketing strategy since the gas is used to draw customers into the store to buy other higher-margin products.
While Costco sells gasoline about 20 cents a gallon below the regional average and it may seem strange that they make money, they do.
In a lot of regions, Costco gas is even lower than Walmart and Sam’s Club, as averages hit 20 cents below predicted prices. However, a look at the revenue raised by those low prices explains why it is a good marketing strategy.
When you fill up at Costco, you are likely going into the store to pick up a few things while you are there.
While Costco is happy you went in to buy some snacks, a new shirt, and giant jars of pickles they want you to notice that new couch you see or upgrade your television.
Costco sells about $20 Billion of fuel each year, approximately 10% of total sales. Although it is a low-margin commodity at 10% there is no shortage of volume at the pumps.
In fact, it isn’t unusual for a Costco location to sell one million gallons of fuel in one month, or eighty-thousand gallons per average gas station.
Also since gas stations like Shell, Exxon and others have independent owners. Because of this model, they cannot drop prices to compete with Costco unlike Costco who can make up for fuel prices in retail sales.
These gas station retailers expect to make a decent profit on the fuel they sell unlike Costco that can make it up in retail goods.
Benefits of Costco Fuel
#1. Top quality.
It is tempting to think Costco sacrifices quality to offer low prices, but that is not true. Gasoline is top quality, just like all Kirkland products in the store.
In fact, Costco uses top tier fuel, which means it meets a certain standard, with cleaning additives to reduce buildup while you drive.
While top tier is not a guarantee of performance, it is known to be better overall while improving engine performance and fuel economy, while protecting the internal engine.
#2. Check Prices in App.
Most people agree having quality gas is important, but they also don’t want to pay too much for it. While everyone knows Costco likely has very cheap gas, you want to be able to compare prices.
Luckily, Costco lets you do this with the Costco app. Before your trip to Costco, you can check what the price of gas is and how it compares to other stations. You can also find other important informational, such as store hours.
#3. Safety Attendants.
When you stop at a typical gas station, there is no one hanging around to look after your safety. Costco has safety-certified attendants taking care of this for customers everyday.
If you are having trouble pumping gas, an attendant is there for assistance, but they also keep the area clean. Most importantly, though, they know how to operate the gas station safely and in compliance with environmental and safety standards. This alone is worth a small fortune!
#4. Diesel.
Costco doesn’t just have top tier gasoline, but it also has diesel available at the pump. If you drive a pickup truck, consistency can save you on fuel. Kirkland signature diesel is equally high in quality as the gasoline.
Costco promises their diesel fuel helps eliminate wear on the engine, proper combustion so starting up is easier, it is designed to clean the engine and also protects the fuel system.
Also, Costcos diesel has been designed for proper injector usage. It is also top tier quality!
#5. Rewards.
While their are many benefits from shopping with Costco in general, you can really up your game if you have an Anywhere Visa Card by Citi. This credit card is 2% back on Costco and Costco.com purchases.
What is special is receipt the card to buy gas! Not only can you source Costco’s super cheap prices, it are also receive 4% cash back when you use it! You can earn a whopping $7,000 a year!
Downsides of Costco Fuel
#1. Long Lines.
If you’ve ever been to the Costco fuel pump during peak times, you know the lines can be long. You sometimes can’t even fit all the cars in the area.
If you are in a hurry, the savings may not work out for you if waiting makes you late for work. Nobody wants to wait long to put gas in when the light comes on and you’re about out of gas.
#2. No Cash.
Thanks to Covid, many people have switched to using plastic to pay these days. Even with so many people using debit and credit cards, there are still some that rely on cash.
Costco does not accept cash and they do not accept any other cards other than debit, Visa credit cards or Costco cash cards; so there is no option to pay cash at their pumps.
If you are one of those that like to walk inside to an attendant, pay in cash, and watch your gas price rise at the pump, getting gas at a Costco may not work for you. Head to the local gas station, or run inside and buy a Costco cash card.
#3. Location.
One downside to Costco is their locations. Costco locations are also not near each other. They don’t clog up the market with pricing like Walmart and Sam’s Club have.
For this reason, there may not even be a Costco gas location near you. If there were, would you drive an hour to get that gas down the road 20 cents a gallon?
Probably not – especially if you drive a gas guzzler. You will probably only pull into a Costco fuel station when you happen to be nearby.
FAQs.
Do you need a Costco membership to purchase gas?
Yes. You need to be a Costco member and have a current membership card to be able to buy gas from Costco. You can also check their website to see how to apply for a Costco membership if you want to use their gas stations at a lower cost.
Can you buy fuel at Costco without a membership?
No. You can not purchase fuel without a current membership card at Costco. You can go to Costco’s website to apply for a membership if you want to use Costco’s gas stations.
Is it worth it to get Costco gas?
Yes. In most cases Costco gas is worth it. However, in order to use their gas stations you have to pay for a membership fee.
But, if you drive a lot and live closer to a Costco gas station it could be worth it. If you hardly ever drive it is something you need to consider with the membership fee and if it is worth it in your situation.
Is Costco gas actually cheaper?
Yes. Costco gas is cheaper than most other gas stations in most cases. But, you have to get a membership to use their gas station and pay a membership fee. If you drive enough and live close to a Costco gas station you could save a lot of money.
What day is the best day to buy gas at Costco?
If you want to avoid waiting in long lines at Costco about the best time to buy gas, then weekday mornings are your best bet and the best time to buy gas would be from 10-11 in the am. There are long weekends line ups due to the low prices on the weekends at Costco gas stations.
Can I use someone else’s Costco card for gas?
Yes, you can use someone else’s Costco card for gas, but its not a good idea because it’s against the rules. If a Costco employee check’s the card it could potentially create a very serious situation.
How do you save on Costco gas?
Even more savings can accrue if you use Costco’s visa card to earn 4% cash back rewards on your gas purchases. This VISA card and discount can be applied to all gas stations. More details can be researched on their website if you intend to get their cards.
What is the cheapest day to buy gas at Costco?
For the most part historically Monday and Sunday are the cheapest days to purchase gas at Costco. That said, this is not always true, so there are not two fixed cheaper days every week. So again you are wiser to check the gas price in real time on their website and then make a decision.
Gas prices at Costco gas locations will vary based on the region. Though I can look at a few locations to get an idea of what people might be paying. For example, the lowest price aside from Costco gas in the Dallas, TX area (Rockwall) is RaceTrac price at $2.96 a gallon. But if you look at the Davis Costco fuel price is $2.64 a gallon. So the difference is $0.32 cents per gallon.
Also, If you look in San Diego, CA Costco currently has fuel prices listed at $4.09 a gallon. Compared to the Pilot which has listed for $4.35, so $0.26 difference. Nevertheless is a considerable savings.