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Why Costco is winning the gas war by refusing to behave like a normal gas station
Costco's unique membership model and strategic pricing for fuel have positioned it as a leader in the gas market, allowing it to maintain lower prices than competitors even during price surges. This approach not only drives traffic to its gas stations but also reinforces membership growth, making it a key component of Costco's overall brand strategy focused on value and customer loyalty.
FastCompany: With the conflict in Iran pushing gas prices higher , Costco ’s fuel program has quietly become one of the most effective ways for consumers to cut expenses. Even as national averages climb, Costco’s gas is typically $0.05 to $0.40 per gallon cheaper than local competitors’, savings that can be crucially efficient during a price surge. Costco’s edge comes from its membership model. A $65 Gold Star or Business membership, or the $130 Executive membership, unlocks access not only to the warehouse’s discounted goods but also to its lower fuel prices. “I got gas at Costco for $2.99 and it’s $3.60 everywhere else.
Wild it’s so much cheaper at Costco,” one user wrote on X . Costco operates roughly 550 gas stations across the U.S., giving members plenty of opportunities to take advantage. Gas isn’t a small line item for the retailer, either. Costco reports that fuel accounts for about 10 percent of total net sales, a steady revenue stream that helps the company keep prices lower. When gas prices soar, Costco often drops its margins and lowers pump prices by $0.30 to $0.40 per gallon. When the market settles, Costco still undercuts competitors, typically by $0.05–$0.15 per gallon.
Gas prices are surging As of March 16, the national average sits around $3.70 per gallon, according to AAA, a price that’s been inching upward for weeks. Across the U.S., gas costs are significantly higher than in previous years, driven in part by Israeli attacks on Iran and broader instability in oil markets. President Trump has offered limited commentary on the issue. Earlier this month, he told Reuters he has no concern about rising oil prices and expects costs to fall once geopolitical tensions ease. “If they rise, they rise,” he said. With prices pushing toward $4 per gallon, the U.S. is nearing the highs last seen in late 2023.
AAA warns costs may continue to climb as winter turns to spring and more drivers return to the road. Costco’s fuel program during past surges Costco has seen similar demand patterns during previous gas price increases. In 2025, the company extended gas station operating hours during a period of elevated prices, leading to record fuel sales. The retailer has offered gasoline since the mid‑1980s and expanded the program significantly during the 1990s.
Because Costco operates as a members‑only warehouse club, customers must present a membership card to access fuel — a requirement that drives additional store traffic and ties fuel demand directly to membership growth. —Moses Jeanfrancois This article originally appeared on Fast Company ’s sister website, Inc.com. Inc. is the voice of the American entrepreneur.
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Costco's innovative approach to fuel pricing and membership integration significantly impacts brand strategy and customer loyalty, making it highly relevant for professionals in the industry.