For many of us, the gas station sign is a weekly gut punch — a number that dictates moods and budgets. In a time of wallet-draining fill-ups, the Costco gas station stands as a beacon of hope, a shimmering oasis of unleaded that's consistently, noticeably cheaper. But this magical fountain of fuel is locked behind a gate, and the key costs $65 a year.
So, what's the verdict? Is ponying up for a Costco membership just to save at the pump a savvy financial move, or are you merely subsidizing someone
else's 50-gallon drum of mayonnaise? The short answer is: It depends, but for a surprising number of drivers, the math may absolutely work out.
By the way, Costco isn't really in the business of selling gas; it's in the business of selling memberships. The cheap gas, like the $1.50 hot dog, is a strategic loss leader designed for one purpose: to get you in the door. The company barely makes a profit on its fuel, using the low prices as a tangible, recurring reminder of the value of that membership card. They can also shove gas prices in drivers' faces — fuel signs with prices lower than at the Shell down the road.
Maybe the money you save on gas will make you feel fiscally responsible enough to walk inside and drop $200 on a giant inflatable flamingo and enough bar soap for a decade. Whether you fall for that part is up to you, but let's break down the numbers and analyze whether a Costco membership pays off for gas savings alone.
Read more: These Are The Cars You'd Buy If They Were $20,000 Cheaper
Do The Math
The whole game is about making that $65 membership fee back in savings. To figure out how many gallons you need to buy at Costco to make it worthwhile, the formula is straightforward: Annual Gallons Needed to Break Even = $65 Membership/Average Savings per Gallon.
First, you need a rough idea of your annual fuel use. Let's say you drive about 15,000 miles a year in a car that gets 25 miles per gallon. That means you're burning through about 600 gallons yearly. Now, the most critical variable: the price difference. This changes by the day and by location, so you have to be your own detective here. Use an app like GasBuddy or just, you know, your eyes, to check the price difference between Costco and your usual gas station for a week or two to find a realistic average.
Here in Nashville, at time of writing, Costco comes in at 20 cents a gallon under the average. Using the formula ($65/$0.20), you'd need to buy 325 gallons of gas from Costco to break even. For our 15,000-miles-a-year driver, that's just over half your annual consumption. And if you live somewhere like Los Angeles, where the savings can be near 50 cents a gallon, you'll be in the black after just 130 gallons.
However, we need to address the elephant in the room, at least for some. The time spent waiting in those notoriously long Costco gas lines might outweigh the savings, a cost that's harder to quantify.
The Credit-Card Cheat Code
Here's where the calculation goes from 2D to 3D. For those willing to add another piece of plastic to their wallet, the Costco Anywhere Visa Card by Citi acts as a savings multiplier. The card, which requires a Costco membership but has no separate annual fee, changes the value proposition by offering 5% cash back at the pump at Costco stations.
This reward stacks directly on top of your at-the-pump savings mentioned prior. So let's revisit that scenario where Costco is 20 cents cheaper than the station down the street. If gas costs $3 per gallon, that 5% cash back is functionally an extra 15 cents off every gallon. Your total effective savings are now 35 cents per gallon, making the break-even point far easier to hit. (The Costco Visa card also gives 4% back on other eligible gas purchases and even EV charging.)
This reward is capped at the first $7,000 in annual gas spend, but at $3 a gallon, that's 2,300 gallons. Unless you drive a Ram TRX to work at 28,000 miles a year — you're likely in the clear.
Of Course, New Jersey Had To Get Involved
Are there places where you can get the cheap gas without a membership? For nearly two decades, the answer was a surprising "yes" — but only in New Jersey. Thanks to a 2004 determination by the state, membership clubs were required to sell fuel to the general public. This exception, however, was reversed in July 2022. Today, there is only one Costco in the entire country legally required to sell gas to the public: the store in Mount Laurel, New Jersey. This isn't because of a state law, but a binding local agreement made with the township's planning board as a condition for building the gas station.
For everyone else, there is a small loophole: anyone, member or not, can pay for gas with a Costco gift card. The catch? Only a member can buy or reload the gift card.
All in, Costco could be a great spot for a deal. Although the focus here is mainly on fuel, Costco also boasts a pretty dang good tire center, plus its own line of motor oils, and carries some excellent microfiber towels. Even if the bottom-line fuel savings alone don't add up, it may still be worth considering Costco's value for the sum of its parts.
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