Why Costco keeps gas prices so low
Gas prices are rising again after a sharp escalation of the war in Iran. As Americans look for ways to save money at the pump, many are turning to Costco gas stations for cheaper fuel.
Demand for Costco’s gasoline has reached record levels. quarter ended May 10However, the company did not disclose sales figures in its third-quarter financial earnings announcement. Many warehouses need multiple fuel deliveries each day to keep up with demand, and the last five weeks of the quarter were Costco’s busiest fuel volume weeks ever, CEO Ron Vachris said on the call.
“We’ve seen really strong demand for Costco gas,” says Mike Baker, DA Davidson general manager and head of consumer research. While gasoline consumption remains flat across the U.S. as higher prices cause some drivers to cut back, Costco says it’s seeing double-digit growth in gallons sold.
Costco gas prices generally averaged 9 cents per gallon between April 2025 and March 2026, below its five largest local competitors and 24 cents below the state average, according to a study by the financial research firm. Gordon Haskett uses GasBuddy data.
The goal is not just to lower the price of other gas stations. Instead, company executives say, lower fuel prices encourage members to visit Costco more often, shop at the warehouse and renew their memberships.
Members who buy gas typically visit Costco more often, spend more overall and renew their memberships at higher rates than other members, CFO Gary Millerchip said on the call. “Just under half of our members also visit the tank when visiting the gas station.”
Baker says the low-cost gas strategy is “more about keeping the value in the membership alive.” “That membership is the lifeblood of Costco.”
The retailer generated more than $5 billion in membership fee revenue in 2025, equal to roughly two-thirds of its net revenue.
If you’re a member, heading to the Costco gas station to save on fuel may sound like a slam dunk. But it’s worth keeping in mind the company’s sales tactics, says Lucas Bucl, a certified financial planner and founder of Level Up Financial Planning.
“Costco’s approach is straight out of the traditional retail playbook—attracting customers with an attractive deal or discount,” he says. “Retailers know that impulse buying can lead to purchases that shoppers did not intend to make.”
She recommends making a shopping list before heading to the store to avoid impulse purchases that can wipe out savings at the pump.
“If it saves you the trip, that’s a good thing,” says Bucl. “However, resist the urge to wander and browse through the aisles.”
Looking to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How to Talk to People at Workexpert trainers share practical strategies to help you use everyday conversations to gain visibility, build meaningful relationships, and accelerate your career growth. Sign up today!
