Spending

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

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Consumers pump gas at a Costco gasoline station on May 11, 2021, in Atlanta, Georgia.
Elijah Nouvelage | AFP | Getty Images
Key Points
  • The average price of a gallon of gas is $4.17, according to AAA.
  • If you're a Costco member or belong to another warehouse retailer, you're likely to find cheaper gas at that pump; and depending on where you are, you may be able to get gas from a Costco even without a membership.
  • "Costco will keep prices lower for a day or two before adjusting to market trends," one expert says.

President Joe Biden has announced that the United States will ban all Russian oil imports in response to Russia's continued invasion of Ukraine. The move will likely send gas prices up further: The average price of a gallon of gas reached $4.17 this week, according to AAA. This is a record high, not adjusting for inflation.

If you're trying to save money at the pump, there are a few strategies you can try:

  • Drive carefully: Hard breaks and quick acceleration eat up gas.
  • Don't speed: Each 5 miles per hour faster you drive over 50 mph increases your gas cost by 18 cents, according to data from the EPA. Try to avoid high-speed roads. If you do frequently drive on the highway, use cruise control: That will save you an average of 7% on gas, according to testing by car review site Edmunds.
  • Price compare: Instead of pulling into the closest gas station, use an app like AAA or Waze to figure out the best prices along routes you frequent, like on your commute.

Another way to save is to buy gas at a warehouse club. If you're a Costco member, for example, you're likely to find cheaper gas at that pump, 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 an annual membership. But savings on gas alone can justify the cost of a 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 Lewisville, Texas, for example, Costco is selling gas for $3.56 per gallon as of March 8, according to driver reports on GasBuddy.com. A Texaco in the same area is selling gas for $3.69 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.

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

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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