Aug 4, 2026
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Add us on GoogleCostco prides itself on its great deals and member satisfaction. But in its Q3 earnings call, company leadership revealed its biggest member draw wasn’t its low grocery prices or popular food court: it was gas.
The company regularly prices its gas lower than local competitors. As the Iran War drove gas prices way up, filling up at Costco became a record-breaking draw for members hoping to spend less at the pump.
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“Gas prices are very much on members’ minds,” said Gary Millerchip, executive vice president and CFO of Costco, on the earnings call. “They have had a major impact on our overall growth in gas and have also, for sure, become a bigger percentage of a member’s total spend in the month.”
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Because of how low Costco prices its gas, the gas itself isn’t a huge moneymaker for the company. But it still drives the company’s profits indirectly.
Here’s how Costco makes money on your gas purchases even with such low margins — as well as how you can protect yourself against it.
Cheap gas encourages you to visit Costco more often
Cheap gas might not provide Costco huge profits on its own. But driving to Costco to get gas impacts your behavior in Costco’s favor.
“When we look at our members that are engaged in gas with us, they are generally visiting more frequently overall. They are spending more with us overall, and they are also renewing at a higher rate,” said Millerchip on the earnings call. “So we do think it is a good, healthy barometer of long-term growth for the business as we continue to drive engagement in gas.”
Millerchip says that a little under half of Costco members visit the warehouse when they gas up.
Costco has a history of pricing certain products well below the market average to encourage more consumer spending overall. For example, its rotisserie chickens have stayed the same low price they were over 25 years ago when they were introduced.
The chickens serve as a loss leader for Costco; by pricing them low and putting them on the far side of the store, the company encourages you to visit them more frequently and walk past the more expensive goods to do so.
Low-priced goods like Costco’s gas and chicken also help members feel like they’re getting a good deal by purchasing a yearly Costco membership, which can cost as much as $130.
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How to avoid impulse buying when you go to fill up
If you find yourself regularly overspending at Costco when you fill up on gas, the easiest solution is to avoid going into the warehouse itself unless it’s part of your regular shopping schedule.
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Once you’re in, making a budget and sticking to a list you wrote pre-visit can both help you avoid impulse purchasing of goods.
If you still find yourself struggling to not buy things you don’t need, going to the store with someone who will help keep you accountable can help you stick to your budget.
And no matter where you’re shopping, keep an eye out for loss leaders like Costco’s rotisserie chicken. If a deal seems too good to be true, take a moment to think about what the company you’re buying from stands to gain from it.
That said, if you can fill up in Mission Viejo, California, you’ll find Costco’s first standalone gas station, which opened in June. In that case, there will be no temptation to shop for more items, as this station isn’t connected to a warehouse.
Costco did not immediately respond to a request for comment.
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Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
