Rising gas prices across the U.S. are driving more motorists to Costco, where cheaper fuel and a smart pricing strategy are helping the retail giant attract new members and boost sales.
WEBDESK – Act Global Media
Rising gasoline prices across the United States are creating a strategic opportunity for retail giant Costco Wholesale, which is increasingly using its discounted fuel to attract customers and boost membership growth.
According to data from AAA, the national average price for a gallon of regular gasoline has jumped 35 cents in just one week, reaching $3.59.
Gas prices stood at $3.25 a week earlier, $2.94 a month ago, and $3.08 a year ago, with analysts pointing to the ongoing conflict involving Iran and seasonal spring travel demand as key factors driving the increase.
Costco’s fuel strategy
Costco has long used cheaper gasoline as a powerful incentive to draw drivers to its warehouses.
Industry observers say the warehouse chain typically sells gasoline at about 20 cents per gallon less than nearby stations, making its pumps particularly attractive during periods of rising prices.
“You save approximately 20 cents a gallon at Costco over other local vendors,” said David Schwartz, co-author of the book The Joy of Costco, in comments to CNBC.
The company’s pricing strategy also allows it to maintain profitability during market swings. When fuel prices rise, Costco raises prices quickly, but when they fall, the retailer lowers them more gradually — helping it recover margins while still undercutting competitors.
Former Costco CFO Richard Galanti defended the approach during an earnings call, saying the strategy allows the retailer to remain competitive while earning modest profits on fuel.
Membership savings add up
Costco’s Gold membership, which costs $60 per year, can effectively pay for itself through gasoline savings alone.
With an average savings of about 20 cents per gallon, a customer would recover the membership cost after buying roughly 300 gallons of fuel annually.
As prices climb, many drivers are willing to travel farther to fill up at Costco stations, boosting traffic at the company’s fuel locations.
Expanding fuel network
The retailer is also experimenting with new standalone gas stations separate from its warehouse stores.
One such station has already opened in California, and another is planned in Hawaii. The Hawaii facility is expected to feature 20 fueling islands and 40 pumps, located about a mile from a traditional Costco warehouse.
Analysts say the strategy could expand if the standalone model proves successful.
“Costco gas is wildly popular with members because of the cheaper prices,” said GlobalData managing director Neil Saunders. “If successful, there are other locations where this could be implemented.”
Fuel sales remain a significant part of Costco’s business. The company operated 747 gas stations worldwide by the end of 2025, with gasoline accounting for roughly 10% of total net sales, according to its annual report.
