Products Costco Gas

Costco Gas

Costco Gas is the member fuel business of Costco.

The first Costco gas station opened in 1995. [S11]

The business is important because it demonstrates a central Costco principle:

A product does not need the highest margin to strengthen the whole membership system.

Explain It in 30 Seconds

Costco sells member-exclusive gasoline at prices positioned as consistently low.

The basic loop is:

Member wants low fuel price
        ↓
Visits Costco Gas
        ↓
Receives visible everyday savings
        ↓
Membership feels more valuable
        ↓
Gas visit can increase warehouse traffic
        ↓
Member shops more / renews

Costco's 10-K says gasoline generally has a lower gross-margin percentage than non-gasoline businesses, but the company believes gas enhances warehouse traffic. [S1]

That is the strategic point.

Where Gas Sits in Costco

Gas is part of "warehouse ancillary" operations.

Other ancillary businesses include:

  • pharmacy;
  • optical;
  • food court;
  • hearing aids;
  • tire installation.

These services are usually located within, next to or near warehouses and are designed to encourage more frequent shopping. [S1]

The Problem Costco Gas Solves

Fuel is:

  • frequently purchased;
  • easy to compare by price;
  • highly visible to consumers.

That makes it a strong category for proving the value of membership.

A member who sees a lower fuel price every week receives repeated evidence that the membership can save money.

Why Lower Margin Can Still Make Sense

Retail analysis often focuses on product margin in isolation.

Costco has to think about system value.

If gasoline:

has lower margin
but
increases traffic
and
improves membership value

then it can strengthen economics elsewhere.

This is why a low-margin product can be commercially rational.

Scale

At the end of fiscal 2025 Costco operated 747 gas stations. [S1]

Gasoline represented approximately 10% of total net sales in 2025. [S1]

That is large enough to materially affect reported sales and margin percentages.

Costco explicitly notes that changes in gasoline prices can distort sales-growth and gross-margin comparisons. [S1]

Kirkland Signature Gasoline

Costco sells Kirkland Signature Gasoline and positions it around quality plus value.

Its official gas materials say the fuel meets TOP TIER performance standards and is sold at member-exclusive prices. [S11]

This creates a connection between two Costco systems:

Kirkland private label
+
member-only ancillary service

What Gas Depends On

Costco Gas depends on:

  • fuel supply;
  • station sites;
  • regulatory compliance;
  • payment systems;
  • warehouse traffic;
  • member price perception.

Fuel markets can be volatile, which is why Costco often presents comparable sales with and without gasoline-price effects.

Why Gas Matters to Membership

A membership benefit is strongest when it is used repeatedly.

Gas can be purchased far more often than:

  • a television;
  • a sofa;
  • jewelry.

That gives Costco a high-frequency proof point for value.

What Most People Misunderstand

"Gas is valuable because it has high margins."

Costco says the opposite: gasoline generally carries a lower gross-margin percentage. [S1]

"Gas stations are unrelated to the warehouse."

Costco explicitly says it believes gas enhances warehouse traffic. [S1]

"Gas is a tiny side business."

It represented about 10% of total 2025 net sales. [S1]

Common Questions

When did Costco open its first gas station?

1995. [S11]

Do you need a membership?

Costco positions its gas stations around member-exclusive pricing; specific local rules can vary by jurisdiction.

How many Costco gas stations are there?

Costco operated 747 gas stations at the end of fiscal 2025. [S1]

Evidence

  • First gas station in 1995: Costco primary source. [S11]
  • 747 stations, ~10% of 2025 net sales and traffic effect: FY2025 Form 10-K. [S1]
  • Lower gross-margin percentage: FY2025 Form 10-K. [S1]

Connected Entities

Costco Costco Membership Costco Warehouse Kirkland Signature