I’m betting stores are given a floor price/cost and are given the flexibility to raise above that up to 10 cents cheaper than the nearest competitors in the specific area. All stores do not have the same ability/flexibility
Some retailers price some products at lost, it those products drive consumers to the store. Say neighboring gas stations sell gas with no profit, and Costco prices 10 cents less, losing the whole 10 cents. A car holds around 15 gallons, so Costco loses $1.5 on the refuel: but then a good chunk of the gas buyers are now with the car in your store, maybe even with a fresh idea of "fuel is so expensive that I need to avoid needless trips", so "as we are already here, lets buy some things I need".
GasBuddy is great, no doubt! I was well familiar with them before working on the site. The issue is that their data is user reported and not directly reported from Costco's warehouse numbers - so there were a few times that the price was vastly different from what was at the pump.
When I first bought my current car, I downloaded GasBuddy, intending to use it to find the best gas prices and the reported prices on the app were uniformly wrong. After the first couple times I used it, I gave up and stopped using it.
The user-reported vs source-reported thing is bigger than people think. I work with car listing prices and the gap between what people say something costs and what the source actually shows is basically the whole reason my product works. Pulling from the warehouse numbers is the right call even if the coverage is smaller.
It's an extensive dataset (Gasbuddy is one of the most used apps in the US) and they have sophisticated techniques to prevent fake/incorrect prices. I've used it for years and have only come across incorrect prices twice.
Costco prices are great but it should not be used to calculate things like "average national gas prices". You will inevitably over-represent the types of places where Costcos are more likely to be built.
Does anyone else find this hyperbolic? Gas prices here in the US are up about 26% from their recent-past price -- it stayed in a very narrow range of about $3.20 for a year or two, and now is at $4.05.
A "FUEL CRISIS" is what you are seeing in Moscow right now. People lined up for miles and sometimes when you get to the front the delivery does not happen because the refinery got blown up. Or at least the 1970s oil crisis. A 26% bump in prices is a major annoyance, not a "crisis."
I would guess that the person who wrote this headline has some kind of a political agenda.
Did he describe it as a "fuel crisis" when gas prices rose from their previous ~2.80 baseline to the peak of $4.93 in June 2022, a 76% increase? Or was it not a crisis then for some reason?
> Did he describe it as a "fuel crisis" when gas prices rose from their previous ~2.80 baseline to the peak of $4.93 in June 2022, a 76% increase? Or was it not a crisis then for some reason?
Ah, that's the "both sides" I was expecting this comment to lead to! Right after downplaying the self-inflicted, but nonetheless global, crisis. The cherry on top is pretending there's a double standard that was broken.
That's a fascinating article! I live in Viet Nam, and it seems a bit like the section about us is overblown though.
There are some short fuel queues these last few months (about a 2-5 minute wait), and a couple of the sketchier petrol stations did some price speculation then shut down. It's more or less business as usual over here though.
My weekly fuel costs went from 50k VND (about 2$) to 60k VND (about 2.50$). My commute is pretty typical for Ho Chi Minh City. A lot (not all) of our taxis and gig workers also switched to electric vehicles some time ago.
Shipping costs, and the price of imported or fresh produce did go up noticeably though. Or the quality went down.
It's just an odd choice on a page that's only about USA fuel prices. I wouldn't describe a 26% increase in any price as a ____ crisis. RAM and storage prices, now that's a crisis.
I believe OP's earnest statement that he's not trying to be political. I just think that propagandizing - if that was the motivation - would be dishonest by most definitions:
If one were just trying to boost Dems in the midterms by the classic "gas prices high -> loss for party in control" method, but they were saying "Inflation isn't that bad and gas prices are fine" during the 76% gas price spike in 2022, that's extreme bad faith.
And if one is implying "Fuel prices are higher now, therefore conflict with Iran is bad" I'd argue that's a shitty, cowardly, and selfish metric to base policy decisions on. Surely some battles are worth fighting because an enemy's behavior is too intolerable to allow, and gas prices being temporarily high is annoying, but not reason to capitulate.
> It's just an odd choice on a page that's only about USA fuel prices
I don't see why. There is a global fuel crisis. It is affecting prices in much of the world. This particular page is about those prices in the US. The page's title, "Tracking Costco Gas Prices During a Global Fuel Crisis", describes exactly and accurately what it is doing.
26% increase on something that is priced into the price of everything else is huge. In comparison the RAM price surge is a big deal in the consumer market but not nearly as bad as the chip shortages a few years back for industrial use. Fuel consumption is not really elastic either. Most people don't really need a new PC, but if you can't afford gas you will end up jobless real quick.
It can also get a lot worse very quickly when countries' strategic reserves run dry.
Just want to clear that up that the jargon is selected specifically from a general understanding and not one from a political skew!
I also wasn't tracking fuel prices back in 2022, otherwise I probably would have included similar dialog given the nature of what caused the prices to rise.
At the gas stations near me, at the start of 2025, I could get a gallon of gas for around $1.85. The stations near me are now up to around $4.30, a 250% increase. I don't know if I'd quite call it a crisis, but certainly it's a major shock.
Costco gas is famously a loss leader, typically running 15 to 20 cents below surrounding stations.
Is this true? I always assumed that Costco just had better deals/longer horizon commitments so it could undercut local stations. Maybe they even own a refinery just to maintain the best margin.
Weird. Costco is never the cheapest price for Coke in my area. Or the previous state I lived in. At least if you bought during sales at competing Supermarkets.
Where they win my Diet Coke business is that they are consistently a "good deal" - never the cheapest, but never the most expensive. And I don't need to wait for a sale to stock up.
I still buy soda from the local grocery stores when I happen by a deal when shopping for other things. But I don't go out of my way. The specials are usually much better than Costco though. By 25% or more per can.
Honestly this goes for most things I buy at Costco. Even in bulk, their per-unit costs beat the standard pricing at competitors - but never the sale prices. It just removes mental overhead. And the bulk prices are always better at a restaurant supply store. Where Costco wins in this area is curation so I can reduce mental load, but then again Costco does the bullshit where they stock something for 6mo out of the year and you spend an extra 20 minutes searching the store for it the next time you need it only realizing they stopped selling it. Then it appears randomly a month later.
They are a decent middle ground for me. I can buy 10lbs of chicken breast of decent quality for $2.99/lb I can toss directly into the freezer pre-packaged into meal-sized portions. Or I can buy 40lb boxes of bulk chicken breast for $1.39/lb from the supply store and spend a couple hours vacuum packaging it myself.
I definitely have a love/hate relationship with the place! I see Costco as the upper middle class consumerism version of nerd sniping.
I shop Costco because I don’t want to have to chase sales all over town. I did that in my 20s when money was tight but now I value my time more than saving fifty cents on chicken.
I don't know if this is how Costco itself thinks of it, but you can get to a pretty decent understanding of their financials by assuming they sell everything at cost and pocket the membership fees as profit. Their actual profits tend to be about 50% higher than that implies, but given the size of the rest of the business that means the membership fees are only about 2% of the revenue overall it's not a bad approximation.
They can twiddle with dropping a bit of price here and raising it somewhere else and still have the same ratio of cost.
Of course you can still think of things in terms of the cost per item versus the profit per item, but the stability of that ratio over many years makes me wonder if maybe Costco thinks of the membership fees that way.
It would be illogical to make gasoline a "loss leader" because, surely, there are people who visit the gas station and then jet out of there without going anywhere else. A loss leader item is something that gets people in the door, puts their butt in a seat, and gets them to make a transaction that will include piling on other stuff. So if your Jumbo Jack is a loss leader, then you can charge $2.00 for sodas and $3.00 for French fries, and the same customer will probably also grab a $6 Oreo shake.
Someone who's filling up for gas may or may not go inside the Costco store proper. But the gasoline isn't going to influence their buying habits. If they "just need gas" that's all they'll get.
Conversely, I cannot see how a $1.50 hot dog is doing anything but losing money. It's a classic candidate for loss leader.
The average Costco ticket is $150 out the door. The retail margin is 11%, or $16.50.
Say you fill the car with 15 gallons, and they lose $0.25/gallon. That’s $3.75. If 1/3 of the gas station customers go in the store, they’re making $5.50 from retail, less the gas losses they net $1.75.
They make money, deny their competition business, and lock you mentally into saving money on gas and renewing that membership. That membership is half their operating income.
I’m probably being pessimistic. One thing with Costco is they are incredibly efficient, so I’m sure they’ve baked out cost and overhead. You can see stuff like how they provide the minimum number of garbage cans.
They are selling 10000 gallons a day at some locations, so I find it hard to believe.
More like they don’t have a need to make a profit and they run the station in a barebones manner on real estate that they get as part of the larger site. So it would be a loss leader for anyone else.
It really doesn't sound good. A loss leader is meant to get you into the store; the gas station is usually far away, in the back of the parking lot.
Their $5 chicken now, that's a great "loss leader" (if it even is; that isn't confirmed). Because that forces you not just into the store, but all the way to the back. So you go in for the $5 chicken and leave with $20 of blueberries, $20 of cereal $20 of milk $20 of mayo.
During what I seem to recall was an earnings call about ten years ago, it was stated that Costco doesn't do loss-leaders. What they more likely do is sell the gas close to cost.
When you have a bunch of stores you do sign distribution deals with a nationwide distributor. If you buy enough fuel you might even be able to sign with an oil company that has refining capacity or their own distribution arm.
So Costco is definitely not paying the same price as your local convenience store. But they aren't getting a 35% discount either.
As many others have noted: Costco does not do loss-leaders. They're likely selling at cost or a very small profit above cost.
When we bought a house in 2021 I had 9.6kW of solar installed (and 20kWh of battery) and bought our first electric car. Since replaced it and have two electric cars now. At times like this I'm thankful for that. I make my own driving energy on my roof, covering over 80% of all driving and home electric usage.
Nobody is signing a national contract for gasoline. It all comes from the local refinery, or in some cases a pipeline to a slightly more distant refinery. The final shipping is by truck and it's almost never the case that you can find a different place that you could drive a truck to that's cost effective. Shipping guests. A few more miles by truck, it's only a few dollars different, and so it doesn't cost much difference per gallon. However, when we're talking 100 miles, now you're talking about significantly more money and that shows up in the pump price. Worse, even if you are willing to pay the price, every state has different specific rules for gasoline and so there is a very high odds that only your local refinery can make the correct gasoline for your local area.
What national chains can do is specify the additive that the refiner adds. Anyone other than a national chain doesn't have enough profit to be worth trying to build their own additive package and takes the standard additives the refinery has, which are almost always a good package anyway.
This is mostly wrong, sorry. Big chains absolutely do sign national or huge regional supply agreements for gasoline, e.g. Pilot/Flying J, Buc-ee’s, Sheetz, Costco, Sam’s Club, Speedway, etc.
You have two main errors: 1) conflating refineries with terminals 2) forgetting that fuel is a fungible financial product.
There are terminals all over the country, within trucking distance of the stations they serve. Those terminals can be supplied by a nearby refinery, yes, but also one or more distant refineries connected to a pipeline or via ship, train, or barge. There is an entire swath of the energy market called "midstream" that handles this.
Once a refined fuel gets into a terminal, its refinery of origin stops really mattering for contract purposes because of swaps. Exxon can supply gasoline in one market while Marathon supplies an economically equivalent amount somewhere else. Nobody is moving “Exxon molecules”. I mean, it literally all goes into the same tank if it's the same product. They (the terminal) just keep track of who supplied how much. The detergent package is also mixed in at the terminal loading rack, along with ethanol in the case of gas, not at the refinery.
Also, very few states actually have specific rules. California is the only real pain in the butt. You might be thinking of summer vs. winter blends, where the refiners adjust the vapor pressure to reduce emission in the summer and to increase ease of engine starting in the winter. This is something every refinery can and easily does.
Correct. Beyond that, doesn't matter. Go to where the fuel is the freshest (hasn't collected water, sat in a rusty tank for a long time, etc.). So, also probably Costco.
There is (usually) a logo on the pump. It's a standard that is vetted by an industry standards body[0].
If a gas station brand advertises Top Tier(tm) gasoline at all, every location must supply it. Diesel is location dependent and warrants more consideration.
Huh. Didn't realize it was actually standardized and not just a marketing claim.
I generally buy my gas at Kroger. I do buy premium as my car requires it. In some quick research just now I discovered that Shell is a major supplier of gas sold by Kroger, which bums me out as I have a long-standing personal boycott of Shell products.
Costco isnt losing $10. They can sell gas at cost to run a gas station if they want to. They break even and get people there instead of a normal gas station.
It is not crazy if you know that gas prices include taxes that can greatly vary by jurisdiction. The price at the pump may have little to do with cost of procuring it.
Every state has their own gas. Well, you might find the same gas in, say, North Dakota and Minnesota or something, but those are right next to each other and have very similar environment situations. On the other hand, I wouldn't be surprised if Minneapolis, and western Minnesota had different rules for environmental reasons.
I think you are wrong about this. My belief is that that most states use "conventional" gasoline, a substantial subset require the same "reformulated" gasoline, and a handful only allow the sale of "boutique" formulations in all or some of their counties.
This means a couple of things: those places don't have 93, and the mileage you get out of a gallon is less.
I wish the government would ban 2 stroke engines (like leaf-blowers), which would have a much larger effect on air quality, vs using CA's oxygenated gas.
Not only taxes, but a specific California blend CARBOB, with 17% of the refineries that made it shutting down [1], causing a big reversal in policy perspectives to pro oil to slow down refineries from leaving [2], and the need to import, by sea, 20% from participating refineries in Asia [3] and 40% from Bahamas [4].
California being on the path to high prices this year was all over the news last year [5], but nobody seems to remember that, instead blaming it all on the Iran conflict.
I don't see any need to 'track' costco gas prices in my area, because at least in western washington state, my local costco is always the least expensive option for regular unleaded. My choice of whether I go there to fill up is simply if it happens to be on the way to/from somewhere else I'm going or is not an unreasonable detour. Or I need to do some other costco shopping. Or it's late at night and the costco is closed, so I have to go to a 24x7 place like an ARCO.
The gas price savings easily pays for the annnual standard costco membership.
Depends on the location. It’s fine everywhere I’ve been. The locations near bigger cities have more pumps and the ones in smaller cities have fewer to scale with demand.
It'd be way better if the clusters showed the average price for all the stations underneath each cluster. Then you could get a sense of prices nationally immediately.
I drove from Fargo to Port Angeles recently and hit up Costco for gas as much as possible. Should have written reviews of the Costcos along I94/I90. Billings was the best.
People spend money on gas, and sometimes one Costco has cheaper gas than another does.
The two Costcos that are nearest to me are listed at $3.65 and $3.79 right now. They're ~25 minutes apart. I think it would be fair to say that there's thousands of people living in-between where the difference in driving distance is irrelevant.
But if they decide that buying gas is a thing they're going to do today, and they can quickly compare the prices beforehand, then: They can use that data to help make an informed decision.
A 14-cent price delta isn't much, but if 11 gallons are purchased then it's enough to cover the price of a Costco hot dog and Coke (with refill). Not bad at all.
---
Additionally: While Costco seemingly doesn't make (much) money on gas, that doesn't mean that they're always cheaper.
Suppose I were making a Costco trip today and I also need to buy gas. I'd be heading to the Costco that has gas for $3.65 because that one is much closer for me.
But I can get gas for $3.62 right now at the station down the block from my house. There's no line there (there's never a line there), there's no membership proof to futz around with, and it's super easy to get in and out of.
Since I have enough easy information to make an informed decision, then: I can tell that the smart move is to plan on skipping whatever line may be present at Costco's gas station and just buy gas down the block. This will save me both time and money.
But tomorrow? Who knows. The situation may be different, so I may make a different decision.
Watching gas prices makes sense. Watching Costco gas prices does not. Their gas is not sold without the membership factor attached. You're selecting for an additional variable of nearby Costco members when you choose to track Costco gas prices. If Costco memberships decline, prices need to slowly rise. If Costco memberships rise, their gas prices can go lower.
I just fill up when I’m low on gas at the nearest gas station. It’s not worth my time to save $1.50 a fill up when I fill up ~50 times a year, that’s only $75.
Spending any amount of time to save 20.5 cents per day is not worth it to me.
People are incredibly irrational about gas prices and have been since I've been alive.
I remember listening to AM talk radio back in the late 90's and a common trope was you'd get someone calling in ranting about gas prices and how they couldn't afford to take their kid on vacation due to current $president in the white house.
Even back in my early teens I'd pencil out the math and it'd be like a $20 price difference for 6 tanks of gas on their 800 mile round trip with the worst fuel efficiency you could imagine. I thought then - as I do now - that if $20 made a difference in you taking a vacation or not you couldn't afford it to begin with.
For most folks it's just an easy topic for people to rant about.
In my travels, the delta is often much greater than ~15 cents. Today is an unusually-consistent day in this market area.
I'd love say that keeping an eye on gas prices and trying to time the market to buy on the right day are things that make poor use of my time. That sounds very nice.
I don't have the financial means to turn a blind eye to these kinds of costs, though. Things are rough over here.
What is more important that those $75 is whether or not the gas offered at the other station is Top Tier grade. Costco always is as far as I can tell. (I am not affiliated with Costco in any way shape or form)
The prices move on dozens of other factors, most of which include the word "supply" however some do not. Using Costco as an example will add "membership retention factor" into the mix of factors for price. Better to track all the Sunoco or BP or Mobil stations directly.
There was a blog post around 10 years ago where someone did the math and found the extra wait wasn't worth the savings if you value your time.
For me, locally, there's a grocery store chain that also has gas stations. If you are a member (which is free), you get a discounted rate on gas - usually only 3-5 cents more per gallon than Costco. And if you do enough groceries in a 3 month period, you occasionally get an additional 10-20 cents off your next filling, which makes it cheaper than Costco.
They're also open a lot more hours than Costco gas. And their lines are shorter.
I don't see the point of going to Costco to get gas.
Costco seems to be a rare responsible organization, treat people decently, don’t gouge customers (they aim for a pretty standard not too high margin), etc. So I know that is definitely a factor for some in terms of choosing Costco as much as possible
I don't live at Costco so it's going to be 30 minutes just back and forth. My Costco does have quieter times, but then I have to plan around it. It never made the slightest bit of sense to make a separate trip for $5.
90% of my EV sessions are at home, at a personal time commitment of 5 seconds to open the charging hatch and plug-in. Maybe 5% of my EV charges take 30 minutes while I'm enjoying a meal or ... wasting time waiting in the car for it to complete at a fast 200 kW charge rate.
Let's nevermind this nonsense about waiting in lines.. I want to know more about what is happening to electrons after they trickle into your tank. Where do they end up when you go for a drive? Are we pumping them back into the air?
I worked at Costco while in college many years ago and I got to see how the gas price was set for my specific warehouse.
Someone would drive out to a few neighboring gas stations, record prices, and set ours ~10 cents lower.
That’s it. That’s how the price was set.
Aside, working there was very good for a college job and I was treated very respectfully for the summers I was there.
I’m betting stores are given a floor price/cost and are given the flexibility to raise above that up to 10 cents cheaper than the nearest competitors in the specific area. All stores do not have the same ability/flexibility
Some retailers price some products at lost, it those products drive consumers to the store. Say neighboring gas stations sell gas with no profit, and Costco prices 10 cents less, losing the whole 10 cents. A car holds around 15 gallons, so Costco loses $1.5 on the refuel: but then a good chunk of the gas buyers are now with the car in your store, maybe even with a fresh idea of "fuel is so expensive that I need to avoid needless trips", so "as we are already here, lets buy some things I need".
Costco has a reputation for treating its workers very well, probably the best option in the retail world.
GasBuddy is great for this. You can see average gas prices across all gas stations for a certain region (or nation-wide).
https://www.gasbuddy.com/charts
The data goes back even over 25 years if you play around with the query params (it started in June of 2000). E.g.
https://charts.gasbuddy.com/ch.gaschart?Country=USA&Crude=f&...
GasBuddy is great, no doubt! I was well familiar with them before working on the site. The issue is that their data is user reported and not directly reported from Costco's warehouse numbers - so there were a few times that the price was vastly different from what was at the pump.
When I first bought my current car, I downloaded GasBuddy, intending to use it to find the best gas prices and the reported prices on the app were uniformly wrong. After the first couple times I used it, I gave up and stopped using it.
The user-reported vs source-reported thing is bigger than people think. I work with car listing prices and the gap between what people say something costs and what the source actually shows is basically the whole reason my product works. Pulling from the warehouse numbers is the right call even if the coverage is smaller.
It's an extensive dataset (Gasbuddy is one of the most used apps in the US) and they have sophisticated techniques to prevent fake/incorrect prices. I've used it for years and have only come across incorrect prices twice.
Costco prices are great but it should not be used to calculate things like "average national gas prices". You will inevitably over-represent the types of places where Costcos are more likely to be built.
> "a Global Fuel Crisis"
Does anyone else find this hyperbolic? Gas prices here in the US are up about 26% from their recent-past price -- it stayed in a very narrow range of about $3.20 for a year or two, and now is at $4.05.
A "FUEL CRISIS" is what you are seeing in Moscow right now. People lined up for miles and sometimes when you get to the front the delivery does not happen because the refinery got blown up. Or at least the 1970s oil crisis. A 26% bump in prices is a major annoyance, not a "crisis."
I would guess that the person who wrote this headline has some kind of a political agenda.
Did he describe it as a "fuel crisis" when gas prices rose from their previous ~2.80 baseline to the peak of $4.93 in June 2022, a 76% increase? Or was it not a crisis then for some reason?
> Did he describe it as a "fuel crisis" when gas prices rose from their previous ~2.80 baseline to the peak of $4.93 in June 2022, a 76% increase? Or was it not a crisis then for some reason?
Ah, that's the "both sides" I was expecting this comment to lead to! Right after downplaying the self-inflicted, but nonetheless global, crisis. The cherry on top is pretending there's a double standard that was broken.
I'm not sure what you want. There is a global fuel crisis. Wikipedia calls it a "worldwide fuel crisis". Is this in dispute?
https://en.wikipedia.org/wiki/2026_Iran_war_fuel_crisis
That's a fascinating article! I live in Viet Nam, and it seems a bit like the section about us is overblown though.
There are some short fuel queues these last few months (about a 2-5 minute wait), and a couple of the sketchier petrol stations did some price speculation then shut down. It's more or less business as usual over here though.
My weekly fuel costs went from 50k VND (about 2$) to 60k VND (about 2.50$). My commute is pretty typical for Ho Chi Minh City. A lot (not all) of our taxis and gig workers also switched to electric vehicles some time ago.
Shipping costs, and the price of imported or fresh produce did go up noticeably though. Or the quality went down.
It's just an odd choice on a page that's only about USA fuel prices. I wouldn't describe a 26% increase in any price as a ____ crisis. RAM and storage prices, now that's a crisis.
I believe OP's earnest statement that he's not trying to be political. I just think that propagandizing - if that was the motivation - would be dishonest by most definitions:
If one were just trying to boost Dems in the midterms by the classic "gas prices high -> loss for party in control" method, but they were saying "Inflation isn't that bad and gas prices are fine" during the 76% gas price spike in 2022, that's extreme bad faith.
And if one is implying "Fuel prices are higher now, therefore conflict with Iran is bad" I'd argue that's a shitty, cowardly, and selfish metric to base policy decisions on. Surely some battles are worth fighting because an enemy's behavior is too intolerable to allow, and gas prices being temporarily high is annoying, but not reason to capitulate.
> It's just an odd choice on a page that's only about USA fuel prices
I don't see why. There is a global fuel crisis. It is affecting prices in much of the world. This particular page is about those prices in the US. The page's title, "Tracking Costco Gas Prices During a Global Fuel Crisis", describes exactly and accurately what it is doing.
26% increase on something that is priced into the price of everything else is huge. In comparison the RAM price surge is a big deal in the consumer market but not nearly as bad as the chip shortages a few years back for industrial use. Fuel consumption is not really elastic either. Most people don't really need a new PC, but if you can't afford gas you will end up jobless real quick.
It can also get a lot worse very quickly when countries' strategic reserves run dry.
Sounds like you're the one making this political.
Hi! Absolutely zero political agenda here, just someone wanting to track the price of fuel.
While Wikipedia isn't always to be trusted (everyone knows that), the situation has been widely described as a crisis: https://en.wikipedia.org/wiki/2026_Strait_of_Hormuz_crisis.
Just want to clear that up that the jargon is selected specifically from a general understanding and not one from a political skew!
I also wasn't tracking fuel prices back in 2022, otherwise I probably would have included similar dialog given the nature of what caused the prices to rise.
At the gas stations near me, at the start of 2025, I could get a gallon of gas for around $1.85. The stations near me are now up to around $4.30, a 250% increase. I don't know if I'd quite call it a crisis, but certainly it's a major shock.
In the US there are structural reasons fuel shocks have less of an effect here
Tbf, the U.S isn't the globe.
The Acquired episode about Costco (https://www.acquired.fm/episodes/costco) claims they don't do loss leaders at all.
I love that podcast and that episode, but I think they got a little Costco fever.
The hot dogs, gas, and chicken are almost certainly loss leaders.
In my store they are selling a case of Coke $4 under everyone, which is certainly not making 11%.
Which is fine by me, it’s my favorite store by far.
Weird. Costco is never the cheapest price for Coke in my area. Or the previous state I lived in. At least if you bought during sales at competing Supermarkets.
Where they win my Diet Coke business is that they are consistently a "good deal" - never the cheapest, but never the most expensive. And I don't need to wait for a sale to stock up.
I still buy soda from the local grocery stores when I happen by a deal when shopping for other things. But I don't go out of my way. The specials are usually much better than Costco though. By 25% or more per can.
Honestly this goes for most things I buy at Costco. Even in bulk, their per-unit costs beat the standard pricing at competitors - but never the sale prices. It just removes mental overhead. And the bulk prices are always better at a restaurant supply store. Where Costco wins in this area is curation so I can reduce mental load, but then again Costco does the bullshit where they stock something for 6mo out of the year and you spend an extra 20 minutes searching the store for it the next time you need it only realizing they stopped selling it. Then it appears randomly a month later.
They are a decent middle ground for me. I can buy 10lbs of chicken breast of decent quality for $2.99/lb I can toss directly into the freezer pre-packaged into meal-sized portions. Or I can buy 40lb boxes of bulk chicken breast for $1.39/lb from the supply store and spend a couple hours vacuum packaging it myself.
I definitely have a love/hate relationship with the place! I see Costco as the upper middle class consumerism version of nerd sniping.
I shop Costco because I don’t want to have to chase sales all over town. I did that in my 20s when money was tight but now I value my time more than saving fifty cents on chicken.
I don't know if this is how Costco itself thinks of it, but you can get to a pretty decent understanding of their financials by assuming they sell everything at cost and pocket the membership fees as profit. Their actual profits tend to be about 50% higher than that implies, but given the size of the rest of the business that means the membership fees are only about 2% of the revenue overall it's not a bad approximation.
They can twiddle with dropping a bit of price here and raising it somewhere else and still have the same ratio of cost.
Of course you can still think of things in terms of the cost per item versus the profit per item, but the stability of that ratio over many years makes me wonder if maybe Costco thinks of the membership fees that way.
It would be illogical to make gasoline a "loss leader" because, surely, there are people who visit the gas station and then jet out of there without going anywhere else. A loss leader item is something that gets people in the door, puts their butt in a seat, and gets them to make a transaction that will include piling on other stuff. So if your Jumbo Jack is a loss leader, then you can charge $2.00 for sodas and $3.00 for French fries, and the same customer will probably also grab a $6 Oreo shake.
Someone who's filling up for gas may or may not go inside the Costco store proper. But the gasoline isn't going to influence their buying habits. If they "just need gas" that's all they'll get.
Conversely, I cannot see how a $1.50 hot dog is doing anything but losing money. It's a classic candidate for loss leader.
In rural America, getting someone into the parking lot isn’t much different than in the front door when the next box store is 10-20+ minutes away.
It makes less sense in the suburbs.
The average Costco ticket is $150 out the door. The retail margin is 11%, or $16.50.
Say you fill the car with 15 gallons, and they lose $0.25/gallon. That’s $3.75. If 1/3 of the gas station customers go in the store, they’re making $5.50 from retail, less the gas losses they net $1.75.
They make money, deny their competition business, and lock you mentally into saving money on gas and renewing that membership. That membership is half their operating income.
I’m probably being pessimistic. One thing with Costco is they are incredibly efficient, so I’m sure they’ve baked out cost and overhead. You can see stuff like how they provide the minimum number of garbage cans.
They are selling 10000 gallons a day at some locations, so I find it hard to believe.
More like they don’t have a need to make a profit and they run the station in a barebones manner on real estate that they get as part of the larger site. So it would be a loss leader for anyone else.
If they lose 10c/gal, it still sounds like an incredibly small amount in the grand scheme of things and like a great loss leader?
It really doesn't sound good. A loss leader is meant to get you into the store; the gas station is usually far away, in the back of the parking lot.
Their $5 chicken now, that's a great "loss leader" (if it even is; that isn't confirmed). Because that forces you not just into the store, but all the way to the back. So you go in for the $5 chicken and leave with $20 of blueberries, $20 of cereal $20 of milk $20 of mayo.
During what I seem to recall was an earnings call about ten years ago, it was stated that Costco doesn't do loss-leaders. What they more likely do is sell the gas close to cost.
Their rotisserie chicken is certainly a loss leader, even if they don't call it that.
Same thing with hotdog combo at $1.50. The price hasn't changed in 40+ years.
Here's a good article: https://www.inc.com/bill-murphy-jr/how-costco-turns-loss-lea...
When you have a bunch of stores you do sign distribution deals with a nationwide distributor. If you buy enough fuel you might even be able to sign with an oil company that has refining capacity or their own distribution arm.
So Costco is definitely not paying the same price as your local convenience store. But they aren't getting a 35% discount either.
As many others have noted: Costco does not do loss-leaders. They're likely selling at cost or a very small profit above cost.
When we bought a house in 2021 I had 9.6kW of solar installed (and 20kWh of battery) and bought our first electric car. Since replaced it and have two electric cars now. At times like this I'm thankful for that. I make my own driving energy on my roof, covering over 80% of all driving and home electric usage.
Nobody is signing a national contract for gasoline. It all comes from the local refinery, or in some cases a pipeline to a slightly more distant refinery. The final shipping is by truck and it's almost never the case that you can find a different place that you could drive a truck to that's cost effective. Shipping guests. A few more miles by truck, it's only a few dollars different, and so it doesn't cost much difference per gallon. However, when we're talking 100 miles, now you're talking about significantly more money and that shows up in the pump price. Worse, even if you are willing to pay the price, every state has different specific rules for gasoline and so there is a very high odds that only your local refinery can make the correct gasoline for your local area.
What national chains can do is specify the additive that the refiner adds. Anyone other than a national chain doesn't have enough profit to be worth trying to build their own additive package and takes the standard additives the refinery has, which are almost always a good package anyway.
This is mostly wrong, sorry. Big chains absolutely do sign national or huge regional supply agreements for gasoline, e.g. Pilot/Flying J, Buc-ee’s, Sheetz, Costco, Sam’s Club, Speedway, etc.
You have two main errors: 1) conflating refineries with terminals 2) forgetting that fuel is a fungible financial product.
There are terminals all over the country, within trucking distance of the stations they serve. Those terminals can be supplied by a nearby refinery, yes, but also one or more distant refineries connected to a pipeline or via ship, train, or barge. There is an entire swath of the energy market called "midstream" that handles this.
Once a refined fuel gets into a terminal, its refinery of origin stops really mattering for contract purposes because of swaps. Exxon can supply gasoline in one market while Marathon supplies an economically equivalent amount somewhere else. Nobody is moving “Exxon molecules”. I mean, it literally all goes into the same tank if it's the same product. They (the terminal) just keep track of who supplied how much. The detergent package is also mixed in at the terminal loading rack, along with ethanol in the case of gas, not at the refinery.
Also, very few states actually have specific rules. California is the only real pain in the butt. You might be thinking of summer vs. winter blends, where the refiners adjust the vapor pressure to reduce emission in the summer and to increase ease of engine starting in the winter. This is something every refinery can and easily does.
Do we know how Costco's "additive package" rates relative to other providers (e.g., Shell's) additive packages?
Currently I buy Shell gas b/c I trust that it's good for my car's engine. Can I trust that Costco's gas is as good as Shell's?
You should be looking for "top tier" gas, which Costco sells.
Correct. Beyond that, doesn't matter. Go to where the fuel is the freshest (hasn't collected water, sat in a rusty tank for a long time, etc.). So, also probably Costco.
What is "top tier" gas and how do you know who sells it?
There is (usually) a logo on the pump. It's a standard that is vetted by an industry standards body[0].
If a gas station brand advertises Top Tier(tm) gasoline at all, every location must supply it. Diesel is location dependent and warrants more consideration.
All fuel sold at Costco is Top Tier.
[0] https://www.toptiergas.com/
Huh. Didn't realize it was actually standardized and not just a marketing claim.
I generally buy my gas at Kroger. I do buy premium as my car requires it. In some quick research just now I discovered that Shell is a major supplier of gas sold by Kroger, which bums me out as I have a long-standing personal boycott of Shell products.
weird fact. there's no refineries in florida. All the gasoline in south florida comes in via ship/barge.
Selling below the price of surrounding stations doesn’t mean they are losing money on the fuel.
Costco has a single store in my country and it’s butter that they sell cheaply to get people in the door. But I doubt they are losing money on it.
It's not true where I live. Costco is on average 5-10c more expensive than the cheaper places near me.
Those places, are they top tier?
It makes sense. The ~$10 someone saves pumping at Costco is easily made up in the >$100 shopping trip they are making, or compared to lifetime spend.
No it doesn't. Costco has a gross profit margin of 11% and a net profit margin of 3%. Losing $10 to make $3 isn't viable.
Costco isnt losing $10. They can sell gas at cost to run a gas station if they want to. They break even and get people there instead of a normal gas station.
Costco has a standalone gas station in Mission Viejo, CA - https://www.costco.com/w/-/gas-station/ca/mission-viejo/1772
I think this is the only one in US without a warehouse.
The prices are at least $0.40 cheaper than nearby gas stations.
> Tracking Costco Gas Prices During a Global Fuel Crisis
10% more expensive than 5 years ago doesn't seem like a "crisis".
Diesel seems like more of a problem: https://fred.stlouisfed.org/series/GASDESW
It's crazy to me that gas in Hawaii, 3k miles out into the Pacific, is cheaper than most of California.
It is not crazy if you know that gas prices include taxes that can greatly vary by jurisdiction. The price at the pump may have little to do with cost of procuring it.
California also has its own special gas that no one else uses, and cannot produce or refine it domestically to meet its own demand.
Every state has their own gas. Well, you might find the same gas in, say, North Dakota and Minnesota or something, but those are right next to each other and have very similar environment situations. On the other hand, I wouldn't be surprised if Minneapolis, and western Minnesota had different rules for environmental reasons.
I think you are wrong about this. My belief is that that most states use "conventional" gasoline, a substantial subset require the same "reformulated" gasoline, and a handful only allow the sale of "boutique" formulations in all or some of their counties.
Here's a list of the states that require reformulated: https://www.epa.gov/gasoline-standards/reformulated-gasoline
And here's a shorter list of those with areas requiring boutique formulations: https://www.epa.gov/gasoline-standards/state-fuels
My belief is that all the rest only require the basic federal standard, which results in a map like this with a lot of states in gray: https://www.eia.gov/todayinenergy/detail.php?id=67464
But if I'm wrong, I'd love to be corrected. What do you have for sources that support your assertion that "every state has their own gas"?
Sadly 2 parts of Arizona use CA gas.
This means a couple of things: those places don't have 93, and the mileage you get out of a gallon is less.
I wish the government would ban 2 stroke engines (like leaf-blowers), which would have a much larger effect on air quality, vs using CA's oxygenated gas.
Taxes.
Not only taxes, but a specific California blend CARBOB, with 17% of the refineries that made it shutting down [1], causing a big reversal in policy perspectives to pro oil to slow down refineries from leaving [2], and the need to import, by sea, 20% from participating refineries in Asia [3] and 40% from Bahamas [4].
California being on the path to high prices this year was all over the news last year [5], but nobody seems to remember that, instead blaming it all on the Iran conflict.
[1] https://www.eia.gov/todayinenergy/detail.php?id=65704
[2] https://calmatters.org/politics/2025/08/oil-compromise-calif...
[3] https://www.yahoo.com/news/politics/articles/california-high...
[4] https://www.americanenergyalliance.org/2026/02/newsom-import...
[5] https://www.forbes.com/sites/davidblackmon/2025/12/07/newsom...
I don't see any need to 'track' costco gas prices in my area, because at least in western washington state, my local costco is always the least expensive option for regular unleaded. My choice of whether I go there to fill up is simply if it happens to be on the way to/from somewhere else I'm going or is not an unreasonable detour. Or I need to do some other costco shopping. Or it's late at night and the costco is closed, so I have to go to a 24x7 place like an ARCO.
The gas price savings easily pays for the annnual standard costco membership.
In Canada I never use Costco gas stations because the line ups are horrendous. Is that true of US Costcos as well?
Depends on the location. It’s fine everywhere I’ve been. The locations near bigger cities have more pumps and the ones in smaller cities have fewer to scale with demand.
It'd be way better if the clusters showed the average price for all the stations underneath each cluster. Then you could get a sense of prices nationally immediately.
I drove from Fargo to Port Angeles recently and hit up Costco for gas as much as possible. Should have written reviews of the Costcos along I94/I90. Billings was the best.
Tracking Costco gas doesn't make much sense as Costco doesn't make money on gas. They use it as a loss-leader for memberships.
Watching prices makes sense.
People spend money on gas, and sometimes one Costco has cheaper gas than another does.
The two Costcos that are nearest to me are listed at $3.65 and $3.79 right now. They're ~25 minutes apart. I think it would be fair to say that there's thousands of people living in-between where the difference in driving distance is irrelevant.
But if they decide that buying gas is a thing they're going to do today, and they can quickly compare the prices beforehand, then: They can use that data to help make an informed decision.
A 14-cent price delta isn't much, but if 11 gallons are purchased then it's enough to cover the price of a Costco hot dog and Coke (with refill). Not bad at all.
---
Additionally: While Costco seemingly doesn't make (much) money on gas, that doesn't mean that they're always cheaper.
Suppose I were making a Costco trip today and I also need to buy gas. I'd be heading to the Costco that has gas for $3.65 because that one is much closer for me.
But I can get gas for $3.62 right now at the station down the block from my house. There's no line there (there's never a line there), there's no membership proof to futz around with, and it's super easy to get in and out of.
Since I have enough easy information to make an informed decision, then: I can tell that the smart move is to plan on skipping whatever line may be present at Costco's gas station and just buy gas down the block. This will save me both time and money.
But tomorrow? Who knows. The situation may be different, so I may make a different decision.
Watching gas prices makes sense. Watching Costco gas prices does not. Their gas is not sold without the membership factor attached. You're selecting for an additional variable of nearby Costco members when you choose to track Costco gas prices. If Costco memberships decline, prices need to slowly rise. If Costco memberships rise, their gas prices can go lower.
I just fill up when I’m low on gas at the nearest gas station. It’s not worth my time to save $1.50 a fill up when I fill up ~50 times a year, that’s only $75.
Spending any amount of time to save 20.5 cents per day is not worth it to me.
People are incredibly irrational about gas prices and have been since I've been alive.
I remember listening to AM talk radio back in the late 90's and a common trope was you'd get someone calling in ranting about gas prices and how they couldn't afford to take their kid on vacation due to current $president in the white house.
Even back in my early teens I'd pencil out the math and it'd be like a $20 price difference for 6 tanks of gas on their 800 mile round trip with the worst fuel efficiency you could imagine. I thought then - as I do now - that if $20 made a difference in you taking a vacation or not you couldn't afford it to begin with.
For most folks it's just an easy topic for people to rant about.
In my travels, the delta is often much greater than ~15 cents. Today is an unusually-consistent day in this market area.
I'd love say that keeping an eye on gas prices and trying to time the market to buy on the right day are things that make poor use of my time. That sounds very nice.
I don't have the financial means to turn a blind eye to these kinds of costs, though. Things are rough over here.
What is more important that those $75 is whether or not the gas offered at the other station is Top Tier grade. Costco always is as far as I can tell. (I am not affiliated with Costco in any way shape or form)
Exactly the mentality I had while building the site
https://xkcd.com/951/
> But I can get gas for $3.62 right now at the station down the block from my house.
But is that gas station selling Top Tier[1] gas? As far as I'm aware, Costco always sells Top Tier, and now they're rolling out Top Tier+.
[1] https://www.toptiergas.com/about-top-tier/
I disagree. The prices still move with the price of oil. Their margins are just lower.
The prices move on dozens of other factors, most of which include the word "supply" however some do not. Using Costco as an example will add "membership retention factor" into the mix of factors for price. Better to track all the Sunoco or BP or Mobil stations directly.
https://archive.ph/qX4vF
Probably a good index for predicting how midterms might go
Another gas price tracker with a heatmap: https://www.fiery.tools/gas-prices
It's too bad there's no API to find the current wait time at the Costco gas station. I'm not going to spend an extra hour of my day to save $5.
There was a blog post around 10 years ago where someone did the math and found the extra wait wasn't worth the savings if you value your time.
For me, locally, there's a grocery store chain that also has gas stations. If you are a member (which is free), you get a discounted rate on gas - usually only 3-5 cents more per gallon than Costco. And if you do enough groceries in a 3 month period, you occasionally get an additional 10-20 cents off your next filling, which makes it cheaper than Costco.
They're also open a lot more hours than Costco gas. And their lines are shorter.
I don't see the point of going to Costco to get gas.
Costco seems to be a rare responsible organization, treat people decently, don’t gouge customers (they aim for a pretty standard not too high margin), etc. So I know that is definitely a factor for some in terms of choosing Costco as much as possible
Oh, I'm happy to do my shopping there. Just not gas and tires.
I understand your argument on gas. But I find the comment about tires to be curious. I literally will not buy tires anywhere else.
Costco:
- Often has a lower price on tires than other stores (particularly when they run a brand specific sale)
- Includes free installation
- Properly torques lug nuts/bolts
- Includes road hazard warranty
- Properly patches tires when you do have a service issue
Those are the highlights...
If only they exposed this data!! Would have been so fun adding the display to the site
Does it routinely take an hour to get gas at Costco near you?
Even when the lines are at capacity the Costco I go to (north of Seattle in Shoreline), I never wait more than like five minutes.
i go befoe costoco opens at 7am . they have different timings.
Or don't go at 9AM with the Executive rush. Wait 30m.
Doesn’t matter at all for my local Costco. It’s busy open to close with very little variance.
The only times I’ve seen it relatively empty were during bad storms.
That said, it’s not an hour wait. Around 20 minutes is average, but I rarely fill up there since I value my time much more than that.
I don't live at Costco so it's going to be 30 minutes just back and forth. My Costco does have quieter times, but then I have to plan around it. It never made the slightest bit of sense to make a separate trip for $5.
Just wait until you have an EV! Then you will get to wait in line for an outlet, and then wait while the electrons trickle into your tank! Good times.
There's no line in my garage.
Also most of the public chargers are networked, so you know when they are busy.
90% of my EV sessions are at home, at a personal time commitment of 5 seconds to open the charging hatch and plug-in. Maybe 5% of my EV charges take 30 minutes while I'm enjoying a meal or ... wasting time waiting in the car for it to complete at a fast 200 kW charge rate.
Let's nevermind this nonsense about waiting in lines.. I want to know more about what is happening to electrons after they trickle into your tank. Where do they end up when you go for a drive? Are we pumping them back into the air?