Costco’s Secret to Saving Money: Its Gas Pumps
Why Costco’s Gas is So Popular
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. Costco loyalists know that the wholesale giant’s gas pumps regularly undercut the competition.
The Numbers
According to David Schwartz, author of "The Joy of Costco", "You save approximately 20 cents a gallon at Costco over other local vendors." That’s a significant saving, and it’s a major draw for customers.
Costco’s Gas Sales
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. This is not a surprise, given that attractively-priced gas helps lure customers into its doors. As the company itself stated in its report, "We believe our gasoline business enhances traffic in our warehouses."
A Boost to Other Businesses
David explains that the gasoline business "is seen as a boost to our other businesses". This makes sense, given that Costco’s wide range of businesses relies on customers coming through its doors. Exxon, on the other hand, is primarily a gas station chain, making its fuel business a central part of its operations.
Calculating the Savings
But what does it take to get your money’s worth from a Costco membership, solely through buying gas? Using some back-of-the-envelope math, David and Susan 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.
Is the Savings Worth the Membership?
If you drive an average car with a fuel economy of 25 miles per gallon, you would need to drive 7,500 miles per year to use up the 300 gallons of gas required to reach the membership savings. That’s approximately 29 miles of driving per day, if you only drive on weekdays, or about 20 miles per day, if you’re on the road seven days a week.
Executive Membership
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. Executive Membership cardholders also get an added benefit of 2% cash back on all their Costco purchases.
Conclusion
As Susan points out, "You don’t even have to go into the warehouse and you’re already saving money." With the right math and the right membership, it’s possible to get a great deal on gas, without ever having to step foot in a Costco store.
FAQs
Q: How much can I save by buying gas at Costco?
A: You can save approximately 20 cents per gallon at Costco compared to other local vendors.
Q: Is the Costco gas worth the membership?
A: If you drive 7,500 miles per year or more, you can get your money’s worth from the regular Costco membership solely by buying gas. If you drive more than 15,000 miles per year, you can get your money’s worth from the Executive Membership.
Q: What is the average fuel economy of a car?
A: The average fuel economy of a car is around 25 miles per gallon, although it can vary greatly depending on the make and model of the vehicle.
Q: What are the benefits of the Executive Membership?
A: The Executive Membership includes all the benefits of the regular membership, as well as 2% cash back on all purchases made at Costco.
