Costco’s Gasoline Deal: How to Save Big Without Ever Stepping Foot in the Store

Costco’s Secret to Luring Customers In

From its famous $1.50 hot dog and soda combo to its iconic rotisserie chicken, there are a few staple items that Costco is known for. But you can get one of the chain’s best deals without ever setting foot in the store. That’s because Costco loyalists know there’s no better place to buy gasoline than at the wholesale giant’s pumps, which regularly undercut the competition.

The Gas Savvy Strategy

“You save approximately 20 cents a gallon at Costco over other local vendors,” says David Schwartz, who co-authored “The Joy of Costco”. “That’s something we have seen time and time again across the country.”

Indeed, Costco’s gas is so popular that the fuel sold by its 692 gas stations in 2023 represented 13% of the chain’s net sales that year, according to its most recent annual report. Selling attractively-priced gas also helps lure customers into its doors.

The Business of Gas Stations

Costco believes its gasoline business “enhances traffic in our warehouses.” “The only reason Exxon sells gasoline is because that’s their central business,” David tells CNBC Make It. “Costco has a wide range of businesses, and this is seen as a boost to those businesses.”

Can You Save Enough to Make it Worthwhile?

Even if you’re not a Costco shopper, the savings on gasoline alone can make the price of a $60 membership worthwhile. Using a little back-of-the-envelope math, David and Susan conservatively estimate that a member would only need to drive 7,500 miles per year while exclusively buying Costco gas before their membership pays for itself.

How to Reach 7,500 Miles

To reach that total, they divided the cost of the membership by the 20 cents per gallon they estimate a driver will save by filling their tank at Costco. The resulting figure is 300, or the number of gallons of gas you’d need to purchase to achieve $60 in savings.

They then multiplied the 300 gallons by 25, roughly the fuel economy of the average car, to determine how many miles a person would need to drive annually to get through that much gas. “My old Toyota used to get 35 or 40 miles per gallon, so 25 miles per gallon is probably really conservative,” Susan says.

Conclusion

That means if your car gets 25 miles to the gallon, you could drive 7,500 miles per year and get your money’s worth from the Costco membership without ever setting foot in the store. If you have the $120 Executive Membership, those figures are doubled, meaning the membership would pay for itself if you put 15,000 miles on your tires each year.

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