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Yo_Mama_Been_Loggin

(137,885 posts) Mon Jun 1, 2026, 01:48 PM 9 hrs ago

How Costco sells such cheap gas

In its 50-year history, Costco has never seen such demand for gas.

Many of its stations have been so overwhelmed that they’ve had to call in tanker trucks multiple times a day to avoid running dry, Costco said this week during its quarterly earnings call. A growing number of customers are buying just enough to top up their tanks, concerned about what tomorrow’s prices may be.

As prices have surged above $4 nationwide – and above $6 along the West Coast – Costco has become America’s destination for cheap gas. Well, relatively. Costco routinely undercuts local gas stations by around 30 cents a gallon.

-snip-

Not a ‘loss leader’

Costco actually makes a profit on gas – a few cents per gallon. That’s substantially lower than the 25- to 35-cent markup that most gas stations take.

https://www.msn.com/en-us/money/companies/how-costco-sells-such-cheap-gas/ar-AA24t9pw

3 replies

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How Costco sells such cheap gas (Original Post) Yo_Mama_Been_Loggin 9 hrs ago OP

In Orange County they are building a stand alone station FHRRK1 9 hrs ago #1

That's about right. Even Franchise stations only make a little profit on the gas. haele 9 hrs ago #2

Not that much cheaper here (Harrisonburg, VA area) Jilly_in_VA 9 hrs ago #3

FHRRK1

(159 posts)

1. In Orange County they are building a stand alone station

Reply to Yo_Mama_Been_Loggin (Original post)

Mon Jun 1, 2026, 01:53 PM

9 hrs ago

Not sure if is a first for them, but interesting.

haele

(15,642 posts)

2. That's about right. Even Franchise stations only make a little profit on the gas.

Reply to Yo_Mama_Been_Loggin (Original post)

Mon Jun 1, 2026, 02:13 PM

9 hrs ago

Here in San Diego, most gas stations are supplier company owned, and price at the pump is pretty much determined by the supplier. No matter if the station is company owed or part of the 10% private or franchisee owned, they all a contracted profit margin of 2 to 3% they can charge at the pumps to "avoid gas station wars"

Which is pretty much a white washing, because all the suppliers know the price of every station within two blocks of their delivery location, and raise or lower the price of their deliveries accordingly.
I'm not saying they collude to fix prices...but....

Costco (and other club stores or Commissaries) is supplying the gas at the pumps with the understanding that their pump costs will be the floor for that area.

Anyway, the actual profit for any individual gas station is gas station store. The gas station manager or owner can charge pretty much what they want outside any promotions suppliers are running. That's why that 99 cent listed bag of assorted stale bodega candy or tall can of Arizona drink costs anywhere from $1.50 to $3.00/2 for $4.00.

Jilly_in_VA

(14,660 posts)

3. Not that much cheaper here (Harrisonburg, VA area)

Reply to Yo_Mama_Been_Loggin (Original post)

Mon Jun 1, 2026, 02:25 PM

9 hrs ago

It's only 4 to 6 cents a gallon cheaper than other stations generally. I know. I pass multiple gas stations and sometimes have to fill up at others due to time constraints or for other reasons so I routinely take note of prices. I steer clear of Exxon, Mobil, and Liberty stations but will fill up at Sheetz or Pilot if I have to, Loves Travel Centers if it's a dire necessity. (The animus against Liberty has to do with the owner, Lou Holtzman, who is a MAGA jerk.)

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