Is a Costco Membership Worth It Just for Gas?

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At $60 a year, a basic Costco (NASDAQ: COST) membership makes sense for anyone who regularly shops at the warehouse club. Some people, however, don’t enjoy shopping in bulk, or they lack the room to store items bought in larger quantities. In other cases people simply prefer buying things from a more full-service chain , meaning joining Costco would be a waste of money.

Costco, however, offers all sorts of perks that go beyond what’s sold in its stores. One of those — cheap gas — isn’t offered at every location. But if you live near one of the chain’s locations that offers gas, it might make sense to join simply for access to its pumps.

Gas pumps.

Costco generally has low prices for gas. Image source: Getty Images.

Should you join Costco just for gas?

Before you consider Costco’s gas prices, you need to think about two things. First, do you live close enough to the warehouse club or pass by one on your normal commute to make getting gas there feasible? Second, do you drive enough to make saving money on gas worthwhile?

If you check off both of those boxes, the next factor to consider is price. Costco generally has gas at cheaper prices than other stations in the area, but it won’t always be the cheapest (though it’s usually close).

For example, in the area where I live in Southern Florida gas averaged $2.65 a gallon as of July 7, while Costco had it for $2.47 a gallon according to data from GasBuddy. In this case, the warehouse club is the lowest-price station in its general area — but there’s slightly cheaper gas at a station that’s right next to the highway a few miles away.

If you’re the type of person who just gets gas when it’s convenient, let’s assume you pay the average of $2.67 a gallon. If you use 10 gallons a week and get it from Costco, you’re saving $0.18 a gallon or $1.80 per tank. Assume you use one tank a week for 52 weeks a year, you will save $93.60. That, of course, is a very simplistic example, but it does show that for at least some people joining Costco just for access to cheap gas makes sense.

Is it right for you?

If Costco isn’t convenient, on the other hand, doing this makes little sense. But if you drive by the warehouse club regularly and can fill up there about two-thirds of the time, it probably makes sense to join.

Of course, once you have access to Costco you’re not limited to just buying gas there. Even if you don’t like venturing inside its store you can still use its online service, which now includes limited delivery. Basically, if you pay for your membership through what you save in gas, then everything else you use it for becomes gravy.

This approach to Costco membership takes discipline and a bit of planning, though. You need to think about filling your tank strategically, and that will sometimes mean getting gas before you really need it. Still, while this may be an extreme way of using the warehouse club, it’s a smart move that lets even more people justify the cost of joining.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy .


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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