Why is Costco selling such low prices on gas?

Costco may be known as the home of bulk foods and chicken rotisserie, but they are also the most trusted place to purchase fuel. Costco can help you find fuel prices that are significantly cheaper than in the surrounding area at any time. How can Costco make gas prices so low and how much does it cost overall?

We explain in this guide how Costco is able to sell gasoline for such low prices. Additionally, this guide will discuss some benefits of filling up at Costco. We'll also point out some downsides that you may not be aware.

Costco Gas Sells So Cheap

Costco sells gasoline at 20 cents per gallon less than the regional average. It is not unusual for the company to make a profit. Costco's main focus is on gasoline sales at high volumes and getting customers to the store for higher-margin products. 

Costco fuel tends to be even lower than Walmart and Sam’s Club in many regions, with averages hitting 20 cents lower than expected. However, an analysis of how much revenue these low prices bring the company shows why it’s a good marketing tactic.

Costco is a great place to stock up on groceries, but you might also want to stop by the shop and grab some snacks. The company will gladly allow you to purchase snacks and a shirt as well as giant pickles jars. But the true goal is for you get that brand new sofa or TV you've been eyeing. 

Costco is responsible for about 10% of total fuel sales each year, selling around $20 billion worth of fuel annually. While it’s a low-margin commodity, there’s no lack of volume happening at the pumps. One Costco store can sell over a million gallons per month while the average station pumps out around 80,000. 

Shell, Exxon, and many other well-known gas stations are often owned by their own owners. Because of this structure, they can’t afford to lower prices to match Costco. These retailers need to make a decent amount of money on the fuel that’s being sold, unlike Costco, who can make it up in retail products. 

RELATED : Which Gas Stations Provide the Highest Quality Gas? (Top 5 Best)

Costco Fuel's Benefits

1. Top Tier

One would think that Costco skimps on the quality to keep the prices low, but that’s not the case. Like all Kirkland products, gasoline in Costco is top-quality.

Costco's top-tier fuel actually meets certain standards. The fuel contains additives to clean and prevent buildup. The top tier fuel has the reputation of improving the engine's performance, maximising fuel economy, and protecting the internal motor components. 

2. Get App Prices

While everyone agrees that high-quality gasoline is essential, no one likes to spend more than they have to. Costco has some of the most affordable gas. However, it is important to understand how pricing compares.

The Costco app makes it easy to check the prices. To compare prices before making a Costco trip, check out the Costco app. Other important information such as hours and location can be found here. 

3. Personal Safety Equipment

When you visit a regular gas station, there’s nobody standing by, ensuring your safety. However, that’s exactly what Costco provides to its customers every day. Costco's safety-certified attendants can run the show. 

You can get assistance with pumping the fuel, and they keep it clean. The best part is that they are familiar with the operation of a fuel station and can help you comply with safety and environmental standards. This is an investment worth the price of gold.

4. Diesel

Costco doesn’t just offer top tier gasoline but also has diesel at the pumps. Pickups can help you save on fuel. Kirkland Signature diesel has the same premium quality as gasoline.

Costco promises that its diesel fuel will not cause engine wear and enhance combustion, allowing for a faster start-up. The diesel fuel is designed to protect and clean the engine. 

Costco diesel's design is also designed to keep the injectors clean. That’s why it has also earned the prestigious status of Top Tier.

5. Get Rewards

Costco shopping is great in many ways, but the Anywhere Visa Card By Citi by Citi gives you even more benefits. You get 2% off all Costco.com and Costco.com orders with this credit card.

The best thing about it is how you get fuel. This card allows you to take advantage of super-low gas prices and also offers 4% cashback. Earn up to $7,000 per year 

Costco Fuel: The Downside

1. Long Lines

If you’ve ever been to the Costco fuel pump during rush hour, you know how long the lines can get. Sometimes, all of the cars won’t even fit into the area.

Savings might not be worth it if your time is short. This applies especially to those who are rushing and might end up late at work. Additionally, you won’t want to wait longer than necessary if the gas light is on and you’re about to run out of fuel. 

2. There is no cash

Although most people now prefer to pay with cash, some still like the convenience of plastic. Costco does not accept debit cards or Visa credit cards. You won’t be able to pay cash at these pumps.

If you are one of the people that need to walk cash inside to the attendant and watch the gas pump rise slowly at the end, getting fuel at Costco won’t make you happy. There are two options: go to your local gas station, or you could run into Costco to buy a Costco Cash Card. 

3. Lage

Costco locations don’t tend to be situated close to one another. These stores don’t oversaturate the market like Walmart and Sam’s Club. 

Costco may not have a Costco station near you. Do you think it is worth driving for 20 cents per gallon to make a savings? Probably not, especially if your vehicle isn’t fuel-efficient. You might not be able to fill up at Costco, especially if your vehicle isn't fuel-efficient. 

Costco Gas Prices

Costco gas prices can vary by region. We can give an estimate of the cost for gas in a number of locations.

RaceTrac, which sells gas for as low as $2.96 per gallon, is an example of this. The local Costco sells it at $2.64 per gallon. That’s a 32 cent savings.

You can also see Costco selling gasoline in San Diego for as low as $4.09 per gallon. It is priced at 4:35 on the Pilot, which gives you an extra 26 cents. Costco can help you save money in any case.