Here’s How Costco Keeps Their Gas So Cheap

The answer is really simple.

The list of reasons why Costco is one of the best places to shop just keeps getting longer. But the one thing that tops the list for the majority of their customers is the low price of Costco gasoline.

In fact, Costco’s gas prices are the lowest in many states. So it makes sense that customers will wait in line for hours just to fill up their tank. But how can the warehouse chain really keep their prices that low?

Once you learn the explanation behind the Costco gas price, read up on these Costco tips frequent shoppers keep to themselves.

How Does Costco Keep Its Gas Prices So Low?

The answer is simple: They just have very loyal customers.

To purchase their gas, you have to be a member, and membership sales make up about 75 percent of the chain’s profit. Since new customers are enticed to sign up because of Costco’s cheap gas prices — and other great deals on everything from electronics to food — the chain can afford to price their merchandise and services much lower than competitors.

Having the gas stations right next to the store drives customers inside, too. Every time a member comes to fill up, they’re also likely to drop a few dollars on food or other household goods as well, including these Kirkland items you should always buy at Costco.

Is Costco’s Gas High-Quality?

You might be worried that because the Costco gas price is so low, the quality of the fuel isn’t great. Don’t worry about that. Just like the Kirkland items they sell in their warehouse, the Kirkland Signature Gasoline is top quality. It meets Top Tier gasoline standards, which means it contains deposit control additives to deep clean engine components for the best possible engine performance.

Are There Any Downsides To Buying Your Gas at Costco?

There are a few downsides to only buying your gas at Costco, but it depends on how you look at it.

As mentioned earlier, there can be long lines. So if you’re in a rush or your gas light is on, it might be better to fill up elsewhere. Also, they don’t take cash — only debit cards, Costco cash cards or Visa credit cards. It’s part of their central mission to keep operating costs to a minimum.

And finally, not everyone has a Costco close to their house. If you find you’re using up more gas driving all the way to the Costco pumps, saving those extra cents per gallon may not be worth it.

On balance, if you plan your shopping trip with your gas fill-up, it really does pay off to be a loyal customer at Costco. Even if that means spending most of your morning waiting in line at the pump, it’s worth it for the cheap Costco gas prices. There’s no secret to making the lines shorter, but here are secrets Costco employees don’t want to tell you.

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Originally Published on Reader's Digest