Our local Costco sells gas for 20 to 30 cents less than all of the surrounding stations. Why is it that only they have a (sort of) reasonable price and the rest are all still way over priced?
Because Costco isn’t in the business of selling gasoline, so they can afford to take a hit on it to get you into the store.
Many (all?) of your local gas stations may be independent operators. Their running costs have to be made up with higher gas prices and non-oil products (food, drinks, tobacco, etc.). On the other hand, Costco can buy in bulk, demand a lower cost price, and their actual running expenses are probably quite a bit lower.
Generally, neither are gas stations. The profit margin is so small on fuel sales that only very high volume stations actually turn a profit on it and instead make most of their money on the high-markup goodies in the store they’re hoping you’ll buy while you’re filling up.
One thing is that there are laws some places that say that gas stations have to mark up a certain amount per gallon over the wholesale price (the idea being to prevent price wars that drive stations out of buisness). So the gas prices in a certain area are usually all pretty close because they get their gas from the same refineries and they’re all at the state-mandated minimum markup.
So I wonder if Costco is either exempt from these laws because they’re a “wholesaler” or if they maybe just “shop around” refineries more. For what it’s worth, in my town the Costco isn’t really ever cheaper by more than a couple cents.
Is the discounted gas only avalable to Costco members? If so, the company would bve willing to lose money on gas if it meant getting more people to buy memberships and shop at Costco. Krogers, a Midwestern grocery store chain, offers discounts at some of its gas stations of 10-50 cents a gallan depending on how many dollars worth of groceries a person buys a month.
I go to BJ’s; you have to scan your membership card at the pump, otherwise you pay the nonmember price, which is about 15-20 cents more per gallon.
I imagine it’s the same at Costco.
Not for Costco. They don’t accept credit cards and they don’t accept cash. They don’t have employees except where required by law. They buy in bulk and pass the savings on to their customers.
A very similar business model to ARCO, except they have AM/PM mini markets. They still make a profit on the gasoline, though.
I once filled up my car at GetGo for 2 dollars and change, this was when gas prices were ridiculously high a few years back.
I did it because I had a bunch of Fuel Perk’s stacked (technically, my dad did, and I used his card…) during some double-perk special thing.
That doesn’t mean that the other gas stations were overpriced, it means that this gas station’s goal wasn’t to make a profit on the gasoline, because I can assure you the money that was spent on the food gave the store more profit than the lost on gasoline.
And don’t wink at me, I don’t like it. It’s strange.
It’s the same, except that there is no nonmember price: If you don’t scan your membership card it won’t allow the pump to start.
Really? I find it hard to imagine that many of those little gas station stores make much profit. Most of the people who buy gas never go in the store, and even if I go in to pay cash for gas, I only very rarely buy anything else. The stores really make enough money to pay for all the land the forecourt takes up, and all the maintenance of the pumps and everything, and still turn a profit?
Whoa, really? Is that why it looks like all of our “regular” gas stations look like they are price fixing?
This doesn’t seem to apply to Costco, at least here. Yes the gas is only available to members, but the gas pumps are so far from the store itself that it seems unlikely that many people go into the store before or after filling up.
Except the Costco is still significantly lower than our ARCOs.
It looks like maybe GreasyJack has the right idea, that Costco is exempt for some reason on some law that requires that gas stations all have essentially the same price in the same area. Which, if true, needs to stop so we don’t have to pay so much! 
Which is why many of those ‘gas’ stations dragged their feet on ‘pay at the pump’. They would have to pay money to install new pumps, which would make it easier for customers to skip coming inside the store and possibly be tempted into buying something else. Many stores only did this when competition with other stores forced them into it.
Costco gas pumps are semi-automated. Members insert their member/credit cards into the pumps and then pump their own gas. No cash accepted. Thus no need to have attendants, except for at least one person to supervise just in case there is an idiot customer. Of course, Oregon Costcos have attendants to pump the gas as required by law and that slows down the process at times.
That’s certainly not the case in the Los Angeles area. ARCO is usually 4-6 cents a gallon cheaper and Thrifty (owned by BP-- same parent as ARCO) is 6-9 cents cheaper.
ARCO charges 45 cents extra if you use a debit card. No extra charge if you use cash. Of course, this is the case at many other stations as well.
What makes you think most people don’t go in? Around here it seems like almost everyone does.
In the Seattle area, AM/PM and Costco gasoline are usually about the same price. But there aren’t 5 cars in line ahead of me at the AM/PM.
What does that leave? Checks? Debit?
I never go in and I don’t pay to much attention but it seems like most people don’t.
What really confuses me is the station that is 10-20 cents higher than everyone else in the area. How do they get any business?
And of course the huge variable in the price increase for premium drives me crazy, I have seen it as low as 15 cents and as high as 45 cents :mad: (My car is supposed to have premium)
Debit or Costco cash card. I should have pointed out they do accept one credit card-- American Express, that Costco has a very preferential relationship with.