High-quality gas at a lower price? A fuel and finance expert helps us explain why Costco gas is so darn cheap.
Here’s How Costco Keeps Its Gas So Cheap
Updated on Jul. 29, 2025
Costco really takes shopping to the next level. Where else can you flash a membership card and have the whole world open up for you? You can pick up a $4.99 rotisserie chicken, snack on a few free samples and get your tires changed in one fell swoop. And let’s not forget the way Costco gas stations always manage to undercut competitors. Which begs the question: Why is Costco gas so cheap?
I’m not one to look a gift horse in the mouth … but I’m also majorly curious about Costco gas prices. Thankfully, Tom Seng, an assistant professor at Texas Christian University’s Neeley School of Business, agreed to help me break it down. If you’re wondering why Costco gas is so cheap, keep reading to find out the details.
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How much does Costco gas cost?
Costco’s prices are typically lower than those of your average gas station. Still, Seng notes that “cheap” is relative, and prices vary by geographic location.
Case in point: A Reddit user in Gilbert, Arizona, recently reported a gallon costing $2.19. However, within a day of that post, a Costco member who goes to the Kirkland, Washington, location (a hop, skip and a jump from Costco’s headquarters) said that a gallon of regular gas cost $4.17. And a member in Ohio said the price for regular gas at Costco was $2.59.
OK, but how does Costco’s pricing compare with other gas stations in the same area? On average, you’ll save about 20 cents per gallon by filling up at Costco, though the savings are even greater in some parts of the country. At the time of this writing, here’s how much a gallon of gas costs in the cities mentioned above, according to Gas Buddy:
- Gilbert, Arizona: $2.79 at Costco and $3.43 at Circle K
- Kirkland, Washington: $4.19 at Costco and $4.49 at 76
- Toledo, Ohio: $2.36 at Costco and $2.59 at Sunoco
What kinds of gas does Costco sell?
When you hit up a Costco gas station, you’re buying Kirkland Signature gas (but of course). Costco offers regular unleaded, premium unleaded and diesel fueling options.
Why is Costco gas so cheap?
With experience in the oil and gas industry, Seng has a handle on how companies price their gas. And he points to one big reason why Costco gas is so cheap: memberships.
Although membership fees make up only a tiny percentage of the company’s revenue, they account for around 70% of its gross profit. That’s reason enough to keep members happy. One way to do that? Sell cheaper gas than everyone else.
Seng says the warehouse store is willing to live with small profit margins as a benefit to its members. Other gas stations can’t do the same. “QuikTrip Corporation used to say they didn’t make money on gasoline and that it was just a ‘draw’ to their convenience stores,” Seng says. “However, they are the most expensive gas in my city. And they raise prices quickly when oil prices rise but lower them very slowly when oil prices drop.”
Why else is it a good idea to buy gas from Costco?
Aside from the cheaper prices (and the proximity to the always-affordable Costco hot dog), there are other reasons to buy gas from Costco.
Easy access to prices
You can check the price of regular and premium fuel at Costco gas stations through the Costco app or website. If you don’t like what you see, you can always compare it with other gas stations. The GasBuddy app is a great tool for finding the absolute lowest-priced gas possible. (But you may as well drive to Costco. It’s likely to come out on top.)
Extra-long gasoline hoses
Stop me if you’ve been here before: You’re at a typical gas station, maneuvering around other cars to find a place to fill up. You finally reach an empty spot … only to realize the machine isn’t on the same side as your gas tank. Talk about frustrating.
Costco gas stations make this process easier with extra-long hoses that allow you to fuel up from either side of your car.
Potential for cash back
If you have a Costco Anywhere Visa Card by Citi, you’ll earn 4% cash back on eligible Costco gas purchases for the first $7,000 you spend per year. And that adds up.
What should you keep in mind when buying gas from Costco?
Truth be told, not a lot. And here’s why: “It’s cheaper than retail gas stations and gas station/convenience stores, but there have been no allegations that the gas is any lower quality than any other source,” Seng says.
In other words, if you’re trying to save money on gas, fill ‘er up at Costco.
About the expert
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At Reader’s Digest, we’re committed to producing high-quality content by writers with expertise and experience in their field in consultation with relevant, qualified experts. We rely on reputable primary sources, including government and professional organizations and academic institutions as well as our writers’ personal experiences where appropriate. We verify all facts and data, back them with credible sourcing and revisit them over time to ensure they remain accurate and up to date. For this piece on why Costco gas is so cheap, Kelly Bryant tapped her experience as a journalist who covers shopping and Costco for Reader’s Digest. Read more about our team, our contributors and our editorial policies.
Sources
- Tom Seng, assistant professor in energy finance at Texas Christian University’s Neeley School of Business and Ralph Lowe Energy Institute
- Reddit: “Costco is out here doing the Lords work, saving us from high gas prices”
- Costco: “Gasoline”
- Costco: “7 Reasons to Fuel Up at Costco Gas Stations”
- Management Consulted: “Behind the Numbers – Cracking the Costco Code”
- The Globe and Mail: “This One Item Helps Costco Earn Billions of Dollars per Year—It’s Not Rotisserie Chicken”
