Costco offers gas for cheaper than anyone else — and it’s paying off

Costco gas fuels traffic to the store in a few different ways.

caption
Costco gas fuels traffic to the store in a few different ways.
source
Cassiohabib / Shutterstock.com

  • Costco offers cheap gasoline for its members.
  • In a survey done by Oil Price Information Service (OPIS) in March 2017, Costco beat rival warehouse clubs Sam’s Club and BJ’s on gas prices.
  • Offering cheap gas is a way it can attract and retain members.

One of the biggest advantages of being a Costco member is getting access to cheap gasoline.

The store offers two types of gas that are exclusive to its members or anyone with a Costco gift card: premium, top-tier gas and standard gas from its signature label, Kirkland. Diesel is also available at some locations.

In a survey done by Oil Price Information Service (OPIS) in March 2017, Costco beat out major gas chains, as well as warehouse-club rivals such as Walmart-owned Sam’s Club and BJ’s, to rank as the cheapest place to buy gas in the US.

Since the price of gas fluctuates greatly, we checked out today’s prices in Pennsylvania to see how the three warehouse brands compared on the price of a gallon of regular gas.

According to estimates posted to Google Maps, customers will pay between $2.53 and $2.66 a gallon at Costco gas stations in the state. At Sam’s Club, the estimate was between $2.56 and $2.75 a gallon. At BJ’s, it was between $2.59 and $2.66 a gallon.

The average price for a gallon of regular gas in the state is $2.75, according to GasBuddy.

As gas is a recurring purchase, it’s an effective way to drive foot traffic to stores. It’s also a way to attract members and keep them loyal.

In its most recent earnings report, CFO Richard Galanti said that Costco’s ancillary businesses, such as gas and travel, were up 23% basis points. Gas represented almost half of this boost.

Costco customers can’t get enough of its gas prices:

Costco

source
Twitter/@CostcoConoiseur

In April 2017, Costco was voted the best big-box retailer to get gas from in a survey of more than 11,000 consumers by Market Force. Costco scored high on fuel quality and price, beating its warehouse rivals and grocery chains Kroger, Walmart, and Safeway.

However, consumers were less impressed with how difficult it was to get in and out.

The lines to get into Costco’s gas stations are one of the major downsides for its members. Many have taken to social media to complain about this:

Costco

source
Twitter/@solowarriormom

But the appeal of cheap gas is enough to keep them coming back – so much so, apparently, that some customers will even risk their cars breaking down.