Spending

Members of Costco, warehouse clubs can 'come out saving money' if they buy gas there, expert says

"Costco will keep prices lower for a day or two before adjusting to market trends."

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You might have noticed your bill at the gas pump being a bit higher than usual in recent weeks. It's a trend that experts say may make it more valuable to join a warehouse club.

The current average price for a gallon of regular gas is $3.04, up nearly 6% from a month ago, according to AAA.

Some of the increase stems from the ransomware attack on Colonial Pipeline, the owner of one of the most important fuel pipelines in the country. The cyberhack forced the company to shutter operations for several days, which caused shortages that drove up gas prices. Prices have gone up nationwide, but Southern states along the East Coast saw the biggest jump.

Demand has also contributed to higher prices. Experts have been predicting $3 gas for months, and they expect prices to remain elevated this summer, as more people resume driving and summer travel.

Buying gas at a warehouse club is a good idea if you're a member, says Patrick De Haan, head of petroleum analysis at GasBuddy.com.

Depending on where you live and what stores are near you, you might have access to warehouse club gas stations even without a membership. But savings on gas alone can justify the cost of an annual membership. "If you're filling up at a wholesale club more than half the time, you can definitely come out saving money," says De Haan. "That membership cost is absorbed by filling up at Costco more than 50% of the time."

Costco tends to have lower gas prices

While Costco eventually raises its gas prices to be similar to market rates, the warehouse club is rarely the first retailer to raise prices, De Haan says. "Costco will keep prices lower for a day or two before adjusting to market trends," he says. "Obviously this is very good for consumers."

Costco can sell gas for a lower price in part because the company buys its gas directly from a gas "terminal," says Tom Kloza, global head of energy analysis at Oil Price Information Service. This means it doesn't pay for gas to be delivered to stores by a third party. The money Costco saves on delivery trickles down to savings for consumers.

In Louisville, Kentucky, for example, Costco is selling gas for $2.82 per gallon and Sam's Club, $2.86 per gallon, as of May 18, according to driver reports on GasBuddy.com. A Circle K in the same area is selling gas for $3.19 per gallon.

If you're filling up at a wholesale club more than half the time, you can definitely come out saving money.
Patrick De Haan
head of petroleum analysis at GasBuddy.com

In Atlanta, Georgia, gas at Sam's Club and Costco is as cheap as $2.53 per gallon, as of May 18, according to driver reports on GasBuddy.com. However, gas at a Citgo is $2.99 per gallon.

Warehouse clubs often tack on additional promotions. For example, Costco has a gas reward credit card and BJ's offers discounts on gas when you buy qualifying store items.

Gas 'scramble' will continue for the next couple of weeks

"Motorists will have to put more effort into finding fuel for the next week, maybe the next two weeks," De Haan of GasBuddy.com says.

Kloza too warns that there will probably be a "scramble" for gas by consumers who are scared the shortage will affect their Memorial Day travel plans.

"I can see next week, Monday, Tuesday, and Wednesday, people telling stories, a lot of it being apocryphal, saying there will not be enough gasoline on Memorial Day weekend," he says. This rush to fill up might cause some outages later in the week.

Motorists will have to put more effort into finding fuel for the next week, maybe the next two weeks.
Patrick De Haan
head of petroleum analysis at GasBuddy.com

Remember, low gas prices are the 'carrot'

Don't let warehouse club gas prices trick you into spending more money than you intend to on products inside the stores, though. Affordable gas is Costco's "carrot" that gets people to come inside and spend more money, Kloza says.

"They might only make a little money on gasoline, but when you go inside Costco and you load up on meats for a barbecue or seafood or other items in the treasure hunt, that's where they make their money," he says.

Always visit a grocery store with a budget and a list, and try not to stray too far from either.

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