Costco gas prices stay low to drive memberships and store visits
Costco’s cheap gas is pulling in record fuel demand and giving members another reason to renew, executives and analysts say.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Costco gas prices are becoming a bigger draw as U.S. drivers look for relief at the pump while fuel prices rise after an escalation of the war in Iran. For Costco members and investors, the gas station is more than a side business: executives say it helps bring shoppers back to the warehouse and supports the membership model that powers the retailer’s profits.
Costco said gasoline demand hit record levels during its fiscal third quarter, which ended May 10, though the company did not disclose fuel sales figures on its earnings call. CEO Ron Vachris said several warehouses needed more than one fuel delivery per day to meet demand, and the last five weeks of the quarter were the busiest fuel-volume weeks in Costco’s history.
Mike Baker, managing director and head of consumer research at D.A. Davidson, said Costco has seen strong demand for its gasoline. He said U.S. gasoline consumption has been flat as higher prices push some drivers to use less fuel, while Costco has posted double-digit growth in gallons sold.
Why are Costco gas prices so low?
Costco prices fuel below many nearby competitors because cheap gas gives members a clear reason to keep using their membership and to visit more often. The strategy can turn a routine fill-up into warehouse traffic, which may lead to more shopping and stronger renewal rates.
From April 2025 through March 2026, Costco’s gas prices averaged 9 cents per gallon below the five largest local competitors and 24 cents below the state average, according to a Gordon Haskett study that used GasBuddy data.
That discount matters because Costco’s core business depends heavily on memberships. Membership fee revenue is the money customers pay for access to Costco’s warehouses and benefits, separate from what they spend on merchandise. Costco generated more than $5 billion from membership fees in 2025, equal to about two-thirds of its net income.
CFO Gary Millerchip told investors that members who buy gas at Costco tend to visit more often, spend more overall and renew their memberships at higher rates than other members. He also said a little less than half of members who stop for gas go into the warehouse during the same trip.
What shoppers should watch for
The savings at the pump can be real for members, but the trip can get more expensive if it turns into unplanned shopping. Lucas Bucl, a certified financial planner and founder of Level Up Financial Planning, told CNBC that Costco’s approach follows a common retail tactic: attract shoppers with a deal, then give them more chances to buy.
Bucl said impulse purchases can erase the benefit of cheaper gas. He recommended making a list before entering the warehouse and avoiding casual browsing if the goal is to save money.
For Costco, the fuel discount helps keep the membership feeling valuable at a time when households are watching everyday costs. For shoppers, the math depends on whether the gas stop replaces another errand or leads to extra spending inside the store.
This story draws on original reporting from CNBC.
