(Nexstar) – If gas prices have you looking for a break, you might consider a specific gas station to cash in on rewards, or perhaps just swing by Costco or Sam’s Club for somewhat lower prices at the pump.
But how do these warehouse clubs manage to offer lower prices compared to other popular fueling spots?
According to Patrick de Haan, head of oil analysis at GasBuddy, it’s largely because they are willing to accept narrower profit margins to draw in customers. Essentially, they see selling gas as a way to bring people into the store. When someone fills up at Costco, they might think, “Oh, while I’m here, I could grab a few things.” This leads to increased spending on higher-margin products.
De Haan also pointed out that gas sales aren’t causing these retailers to lose money. For instance, Costco’s famous $1.50 hot dog and soda meal has remained unchanged since the 1980s, attracting customers who often buy other higher-priced items while they’re there. You could also say something similar about their rotisserie chicken.
One factor that helps keep gas prices down at these warehouses is their ability to effectively manage their costs, as noted by oil industry consultant Andrew Lipow.
De Haan mentioned that gas at warehouse stations is generally 5 to 25 cents cheaper per gallon compared to other local options. Furthermore, when prices rise, these retailers often maintain lower prices for a longer time.
The price of fuel may vary somewhat between Costco and Sam’s Club, yet they both provide options like unleaded, premium, and diesel fuels. One key difference is that only Costco offers Top Tier fuel.
Top Tier fuel is designed to keep engines cleaner by minimizing deposit buildup on injectors and intake valves. A survey from AAA in 2016 suggested that vehicles using Top Tier fuel are significantly cleaner—up to 19 times less dirty than those that don’t.
Ultimately, investing a bit more into Top Tier gas may be worthwhile, as Carfax noted, stating that the benefits truly aren’t just a myth.
