Why Is Costco Gas So Cheap, and How Much Do You Really Save?

Costco gas is usually the cheapest in town, and people reasonably ask how that works and whether the savings are real once you pay for a membership. This post explains how Costco sells such cheap gas, then puts numbers on the discount using our own September 29, 2026 price reading, and works through the savings for a typical driver in the US and Canada.

Short answer: Costco gas is cheap because Costco uses fuel to bring members to the warehouse and makes its money on membership fees, so it can run the pumps on a thin margin with high volume and low overhead. On September 29, 2026, the Costco stations we track were a median 24¢/gal below their own state's AAA average, and a 2025–26 industry study put Costco about 9¢/gal below its five biggest nearby competitors. For a typical US driver that is roughly $40 to $115 a year, which may or may not cover the $65 membership on gas alone.

Why is Costco gas so cheap?

Costco treats gasoline as a reason to visit, not as a profit centre. In its fiscal 2025 annual report, Costco says: "We believe our gasoline business enhances traffic in our warehouses; it generally has a lower gross margin percentage and lower SG&A expense relative to our non-gasoline businesses." In plain terms, Costco accepts a smaller cut on each gallon because fuel customers come back more often and spend money inside.

Costco's CFO, Gary Millerchip, has said members who buy gas visit more often, spend more and renew at higher rates, and that roughly half of fuel customers also shop in the warehouse on the same trip (as reported by GuruFocus/Yahoo Finance in July 2026). That is the classic traffic-driver model, the same logic as its famously cheap rotisserie chicken.

It is not quite a loss leader. Costco does not report a gas-only profit, and nothing it publishes says it sells fuel below cost. The accurate description is "low margin by design."

The membership fee is what makes it work

Costco's profit leans heavily on membership fees. In fiscal 2025 (the year ended August 31, 2025), Costco collected $5.323 billion in membership fees against net income of $8.099 billion, and its renewal rate in the US and Canada was 92.3%. Gasoline, by contrast, was about 10% of Costco's total net sales from 747 gas stations.

Because the fee is paid up front and renewals are high, Costco does not need to squeeze each gallon. Cheap gas helps keep members renewing, and renewals are where much of the profit comes from.

High volume, low overhead

A Costco gas station is built to move a lot of fuel with few extras:

• Many pumps, high throughput. Costco has reported record gasoline volumes in 2026, with CEO Ron Vachris saying many warehouses needed multiple fuel deliveries a day. Spreading fixed costs over more gallons lowers the cost per gallon.
• Few grades. Costco stations sell regular and premium, and some sell diesel. None of the 592 US stations in our data lists a midgrade price. Fewer products means simpler tanks and logistics. Our guide to Costco gas grades and octane explains why.
• No convenience store to staff. Costco's pumps are self-serve with a few attendants and no snack shop, so labour and building costs are low. Costco's annual report notes gasoline has lower SG&A (operating) expense than the rest of its business.
• Card-only payment, one network. Costco pumps take no cash, and in the US the only credit network is Visa (Mastercard in Canada), which keeps processing costs down. See which cards Costco gas accepts.
• Unbranded fuel. Costco sells Kirkland Signature gasoline, not a major oil brand, so it does not pay a brand premium. A Federal Reserve Bank of Dallas working paper describes these "hypermart" stations (Costco, Sam's Club, Kroger) as selling unbranded gasoline with "numerous pumps and high sales volume." Kirkland Signature is still Top Tier detergent gasoline; see is Costco gas Top Tier and where Costco gets its gas.

Does Costco make gas cheaper nearby too?

Probably, a little, within about a mile. Economists Reid Taylor (Dallas Fed) and Erich Muehlegger (UC Davis) studied every gas station in California from 2014 to 2018. They found that a new station opening nearby cut prices at existing stations within a mile by about 2.5 cents a gallon, and the effect lasted for years. For high-volume "hypermart" entrants such as Costco, the estimated drop was larger, about 5 cents, though the authors call the station-type differences suggestive rather than precise.

That matters for the savings math. If Costco pulls nearby prices down, the gap between Costco and the station across the street understates what Costco saves drivers in that area overall, and it also means the gap you see locally can be smaller than the gap to the state average.

Is Costco gas cheaper? What the numbers say

Yes, in the vast majority of places, but by less than people often assume. How much depends on what you compare against.

The first two rows come from a study by research firm Gordon Haskett, reported by CNBC and GuruFocus in 2026. Our own figures line up with the state-average number almost exactly.

How much cheaper is Costco gas in the US? Our September 29, 2026 comparison

We compared each of our 592 US Costco stations with the AAA regular average for its own state on the same day (AAA, "price as of 9/29/26"). The results:

• Costco was below its state's average at 96% of stations.
• The median gap was 24¢/gal; the middle 80% of stations ranged from about 6¢ to 46¢.
• The biggest state gaps were in Maryland (38¢), New York (36¢), California (33¢) and Colorado (33¢). The smallest were in Kansas (5¢) and Montana (8¢).
• In Texas, our cheapest state, Costco averaged $3.66 against AAA's $3.90, a 24¢ gap.

A warning about national averages. Our average Costco regular price was $4.643/gal, which is higher than AAA's national average of $4.456 the same day. That does not mean Costco is more expensive. Costco's stations are concentrated in pricey states: 128 of our 592 are in California alone. If you weight AAA's state averages by where Costco stations actually are, the comparable figure is $4.893, about 25¢ above Costco. Comparing a Costco average with a national average mixes different regions, so always compare within the same state or town.

How much cheaper is Costco gas in Canada?

The gap looks similar in cents but is measured per litre. Our 78 Canadian gas bars averaged 173.0¢/L for regular on September 29, 2026. CAA's national average that morning was 179.3¢/L, about 6¢/L higher. Kalibrate's weekly survey for September 22 put the national average at 191¢/L, which shows how much the two trackers can differ.

By province, against Kalibrate's September 22 averages (a week earlier than our reading, so treat these as rough):

A fair reading is that Costco gas bars run somewhere around 6¢ to 16¢/L under the average in September 2026, which is roughly 23¢ to 60¢ a US gallon in Canadian dollars. Check local prices before assuming the top of that range.

How much do you really save at Costco gas?

For most drivers, somewhere between a coffee and a tank of gas per month, not hundreds of dollars. Here is the math with round numbers.

US example: 12,000 miles a year at 25 mpg is 480 gallons. A fill is 15 gallons.

Canada example: 20,000 km a year at 9 L/100 km is 1,800 litres. A fill is 60 litres.

The Canadian numbers look better mainly because a typical driver buys more fuel by volume and the per-litre gap is a larger share of the price. Both countries charge $65 a year for Gold Star and $130 for Executive (Canada adds tax), after the September 2024 increase. Executive's 2% reward does not apply to gas; our Costco membership and gas guide covers the tiers.

Break-even: how much gas pays for the membership?

Divide the fee by your per-gallon discount. At 9¢/gal, a $65 membership takes about 722 gallons to pay back, more than the 480-gallon driver above buys. At 24¢/gal it takes about 271 gallons, or around 18 fill-ups. Most people who join Costco also shop there, so gas savings are usually a bonus on top of the membership rather than the only reason for it.

Subtract the detour and the line

Driving out of your way eats into the savings. GasBuddy's Patrick De Haan offers a rule of thumb: in a sedan, Costco needs to be at least a penny a gallon cheaper for each mile of round-trip detour, and about 2¢ for each mile in an SUV (as reported by the San Francisco Chronicle). A 5-mile round-trip detour in an SUV needs a 10¢ gap just to break even.

Lines cost time too. If you value your time at $20 an hour, a 10-minute wait is worth about $3.33, more than the whole saving on a 15-gallon fill at a 9¢ gap. The savings are cleanest when Costco is on your usual route and you avoid the rush.

Stack the co-branded card

The Costco Anywhere Visa by Citi pays 5% back on Costco gas (4% on other gas, on a combined $7,000 a year), and the CIBC Costco Mastercard pays 3% at Costco gas bars in Canada. At $4.643/gal, 5% is about 23¢ a gallon. That is on top of the pump discount, but if you already use the card at other stations the extra from choosing Costco is only the 1-point difference. Details are in our post on Costco gas credit cards.

How to save more at Costco gas

• Check the price before you go. Our station finder shows today's Costco regular, premium and diesel prices for every tracked station in the US and Canada, so you can see whether the gap in your town is 5¢ or 40¢.
• Watch the 30-day history. Every station page, for example Costco Morena in San Diego, shows 30 days of prices. Across our US stations, regular rose about 42¢ between August 31 and September 29, 2026, so a trend line helps you decide whether to top up now or wait.
• Fill up off-peak. Early morning and later evening are usually quieter than weekend middays. Most US Costco pumps open at 6:00 AM on weekdays, some earlier; see Costco gas hours for your station.
• Buy the grade your car needs. Premium averaged 64¢/gal more than regular at the same US station (median) and about 23¢/L more in Canada. Paying for premium your engine does not require wipes out the Costco discount several times over.
• Combine trips. A Costco fill-up is worth most when you are already going to the warehouse.

Frequently asked questions

How does Costco sell such cheap gas without losing money?

Costco takes a smaller margin on fuel than most stations and makes up for it with high volume, low overhead, and membership fees. Its annual report says gasoline has a lower gross margin but also lower operating expenses than the rest of the business, and it believes gas drives warehouse traffic.

Is Costco gas always the cheapest in town?

No. It is usually cheaper, but a nearby discount station or a competing warehouse club can match or beat it on a given day. In our September 29, 2026 reading, about 4% of US Costco stations were at or above their state's AAA average.

Is Costco gas cheaper than Sam's Club or BJ's?

It varies by market. The warehouse clubs all use the same low-margin model, so their prices are often within a few cents of each other, and the only reliable answer is to compare the stations near you on the same day.

Is Costco gas worth it without shopping at Costco?

Only if you buy a lot of fuel or live in a market with a wide gap. A typical driver saving 9¢ a gallon would not recover the $65 Gold Star fee from gas alone, while one saving 24¢ a gallon would, with about $50 left over.

Why is Costco gas cheaper in some states than others?

The price you pay mostly follows the local market: state fuel taxes, regional fuel blends and refinery supply. Costco's discount sits on top of that, so Costco in Texas is far cheaper than Costco in California even though both are below their state averages. The same forces explain the gap between countries; see Costco gas in Canada vs the US.

What is a good Costco fuel savings strategy in Canada?

Check your local gas bar's price against nearby stations, fill up when you are already at the warehouse, and pay with a card that earns gas rewards, such as the CIBC Costco Mastercard at 3%. With a typical gap of about 6¢ to 16¢/L, a driver using 1,800 litres a year saves roughly $108 to $290.

Does Costco gas lower prices at nearby stations?

Research suggests it does, modestly. A California study found that a new high-volume station like Costco was associated with about a 5-cent drop in prices at stations within a mile, compared with about 2.5 cents for an ordinary new station.

Sources

• Costco Wholesale Form 10-K for fiscal 2025, SEC — gas as a traffic driver with lower gross margin and SG&A, 747 gas stations, gasoline about 10% of net sales, membership fees $5.323 billion, net income $8.099 billion, 92.3% US/Canada renewal rate.
• Costco Gas Demand Hits Record as Low Prices Drive Member Visits, GuruFocus via Yahoo Finance (July 24, 2026) — record gas volumes, multiple daily deliveries, CFO comments on gas members, about half going inside, Gordon Haskett 9¢ and 24¢ figures.
• Why Costco keeps gas prices so low, CNBC (July 24, 2026) — reporting of the Gordon Haskett/GasBuddy study (seen in search results).
• The Effects of Competition in the Retail Gasoline Industry, Taylor and Muehlegger, Federal Reserve Bank of Dallas Working Paper 2509 — 2.5¢ entry effect within one mile, about 5¢ for hypermart entry, hypermarts sell unbranded fuel at high volume.
• The Effects of Competition in the Retail Gasoline Industry, NBER Working Paper 33569 — revised (April 2026) version of the same study, 2.7¢ entry effect.
• State Gas Price Averages, AAA — state and national regular averages as of September 29, 2026 ($4.456 national).
• National Average Climbs Nearly 5 Cents Since Last Week, AAA Newsroom (September 24, 2026) — context on record September prices.
• Gas prices, CAA — Canadian national average of 179.3¢/L on September 29, 2026.
• Average gas price per litre in Canada, Finder (Kalibrate data) — national 191¢/L and provincial averages for September 22, 2026.
• What is an Executive Membership?, Costco Customer Service — $65 Gold Star and $130 Executive fees.
• Is Costco gas really cheaper? Here's when it's worth the trip, San Francisco Chronicle — Patrick De Haan's penny-per-mile detour rule (seen in search results).
• Costco Anywhere Visa Card by Citi, Citi — 5% Costco gas, 4% other gas on a combined $7,000 a year.