Is Buying Gas at Costco Actually Cheaper? Breaking Down the Cost Savings

Is Buying Gas at Costco Actually Cheaper? Breaking Down the Cost Savings
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Is Costco Gas Actually Cheaper Than Regular Gas Stations?

Filling up your gas tank can be a pain, especially with gas prices seeming to inch higher and higher. Everyone wants to save money at the pump, which prompts the question - is buying gas from Costco actually cheaper than regular gas stations? With steep membership fees, it's reasonable to wonder if Costco gas is worth it purely for fuel savings.

How Costco Gas Pricing Works

Costco has contracts with specific gas suppliers to buy fuel at lower prices. Because they have agreements to purchase large volumes of gas, Costco has leverage to acquire better rates which they pass on to their customers.

The fuel sold at Costco gas stations is the same or very similar in quality to fuel sold at traditional gas stations. But by cutting out middlemen and negotiating pricing, Costco is able to offer lower prices at the pump.

What Does the Data Show on Costco Gas Savings?

Over the last 12 months, Costco gas prices have been on average $0.30 per gallon cheaper than national average gas prices across the major fuel brands like Shell, Exxon, and Chevron.

For example, if the national average for regular gasoline is $3.50 per gallon, Costco gas would typically be priced at around $3.20 per gallon. The difference adds up, especially for drivers with larger fuel tanks or who fill up weekly.

Variables That Impact Costco Gas Prices

While Costco gas may consistently be lower priced, there are factors in play that cause some fluctuation:

  • Location - Prices vary from region to region based on taxes, distribution fees, etc.
  • Seasonality - Summer blends tend to be more expensive. Prices also vary around holidays and peak travel seasons.
  • Competing stations - If nearby stations drop prices, Costco may adjust pricing to stay competitive.

So savings vs. regional averages may vary. But generally Costco gas beats out pricing from major brands and local stations.

Does a Costco Membership Pay for Itself with Gas Savings?

A basic Costco membership costs $60 per year. For Executive members, the upgrade fee is an additional $60 annually ($120 total). With average gas savings estimated around $0.30 per gallon when filling up at Costco, does the membership pay for itself?

Breaking Down the Costco Gas Savings

Looking at average yearly gasoline consumption can determine if Costco membership costs are covered by filling up at their pumps. AAA estimates the typical driver covers 13,476 miles per year. Assuming a vehicle fuel efficiency of 25 MPG combined city/highway driving, that equates to about 539 gallons consumed annually.

If gas prices at regular stations average $3.50 per gallon over the year, filling those 539 gallons would cost around $1,887. With a $0.30 per gallon discount at Costco, the annual fuel expense reduces to $1,617 - savings of $270 per year on gas.

Given basic membership is $60 annually and Executive membership is $120 per year, the gas savings do offset the fees just through discounted fuel costs. Any additional grocery, household goods, medication, etc. savings just add to the overall value.

Breakeven Point on Costco Membership

Looking purely at fuel savings, if gas prices stayed at that national $3.50 average, driving habits would determine when Costco membership costs are recouped:

  • Basic membership - 200 gallons (8+ fill ups for 25 gallon tank)
  • Executive membership - 400 gallons (16+ fill ups)

So light drivers may take more than a year to hit the breakeven point. But for most commuters and people routinely traveling by car, buying gas at Costco covers the membership costs.

Pro Tips to Maximize Costco Gas Savings

Simple tactics can help maximize fuel economy when filling up at Costco gas stations:

Shop Gas Price Cycles

Retail gas prices tend to follow weekly cycles with peaks and valleys based on shipments and demand. Costco gas pricing moves up or down accordingly. Routinely filling up mid-week right before shipments arrive can score the best rates.

Use High Grade Fuel Selectively

Premium gasoline can offer more cleaning additives and performance benefits in certain engines. But always using the highest octane fuel if an engine is rated for regular can negate potential savings. Use premium only when recommended for the make/model or during extended highway driving stretches.

Enroll in Executive Membership

The +$60 annual Executive Membership may pay for itself with just a couple more fill ups. And the 2% annual rewards on qualifying Costco purchases can add up significantly for larger households loading up on non-fuel items each visit.

Apply for Costco Citi Visa Card

Costco shoppers with the Costco Anywhere Visa® Card by Citi get an additional 4% in rewards on the first $7,000 spent on gas annually across all stations - plus 2% back after that threshold. The perks extend Costco gas savings even further.

The Verdict on Costco Gas

Reviewing the numbers shows definitively filling up at Costco gas stations can lead to significant savings compared to national average pricing from major fuel brands. For regular Costco members shopping there already, it's an obvious gain to hit their fuel pumps consistently.

Even when accounting for Costco membership fees, the gas savings offset the annual costs - allowing the bulk discounts on groceries, home goods, medication, and other staples to just bolster overall domestic budget savings further. Savvy drivers looking to pinch pennies should absolutely keep Costco gas in their regular retail fuel rotation.


How does Costco offer cheaper gas prices?

Costco negotiates contracts to purchase large volumes of gas at lower rates from specific suppliers. They're able to pass these bulk rate savings on to customers at the pump.

Does buying gas at Costco cover the cost of membership fees?

Yes, the average savings works out to around $0.30 per gallon. For most drivers filling up weekly, that adds up fast enough over a year to offset basic and executive membership costs.

Does Costco adjust gas prices often?

Pricing does fluctuate almost daily to stay competitive regionally. But discounts off average prices tend to remain fairly consistent in the $0.25 to $0.30 range per gallon.

Is Costco gas the same quality as other stations?

Yes, the fuel sold at Costco meets Top Tier detergent standards like other major brands and contains the expected mix of additives - it just costs less.

Can non-members purchase gas at Costco?

No, a valid membership card is required to activate the gas pumps. Some locations do sell gift cards for gas only, but joining is necessary to access fuel discounts.

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