While gasoline prices remain above $4 a liter, they have fallen for three straight weeks, and news about a potential end to the conflict in Iran is setting the stage for further declines.
“As of May 21, the national average has decreased from $4.56 to $4.12 due to crude oil prices remaining below $100 a barrel,” AAA reported.
That’s much-needed relief for shoppers heading into the heart of the summer driving season, but Costco members may not see prices drop as quickly as they do at regular gas stations, as well as Kroger and Walmart.
Warehouse Club does that on purpose, and while its prices may be as low as many other chains, that’s part of a broader strategy to serve its members.
Costco has a gas plan
Costco deliberately prices fuel differently than most of its competitors, a strategy the warehouse club has discussed publicly for years on earnings calls.
When gas prices go down, Costco doesn’t lower prices at the same pace it raises them when prices go up. This allows the company to recoup some of the lost profits by doing the opposite when prices rise.
That drops another pain on the tap for Costco members as prices rise.
Former Costco CFO Richard Galanti defended that trend, discussing the warehouse club’s gas business during its second-quarter 2022 earnings call.
“I think that part of that story has been abandoned because it seems that not only us, but the wholesalers and other wholesalers who use the high prices of gas stations, have been able to use it as well. As the prices go up or down, even down a little, they don’t come together as quickly as they could, which gives us, in our view, the ability to be more competitive,” he said.
Costco uses low gas prices to drive members to its stores and add to the value of its membership. That gives the chain flexibility in pricing, because it doesn’t need to make as much per gallon as many competitors.
Costco gas stations only accept credit and debit cards, no cash.Shutterstock
Costco sees gas as a member retention tool
Costco’s CEO noted that the warehouse club recorded record sales in each of its three quarters in its third quarter for gas sales by volume. He also explained that higher fuel prices nationally fueled that, while speaking on the chain’s Q3 earnings call.
“The high price sensitivity of consumers, which drove these records, also prompted many members to use our gas stations for the first time in the third quarter. We believe that this will encourage even greater loyalty to these members in the future as members who use our gas stations usually spend more money with us in the warehouse,” he said.
Costco has also dipped a toe into independent gas stations. That’s something GlobalData Managing Director Neil Saunders believes the chain can grow.
“Costco gas is very popular with members because of the cheap prices. If it’s successful, there are other places where this can be done,” he told the Arizona Republic.
Kroger and Walmart are taking a different approach
Walmart uses gas incentives to drive people to its stores and promote membership in its $12.95 a month, or $98 a year Walmart+ service. Membership comes with savings of $0.10 per gallon of gas, and special deals that offer even greater savings.
Memberships can be used at partner channels and at Walmart’s answer to Costco, Sam’s Club.
“Save 10¢ per gallon at Walmart, Exxon, Mobil and Murphy stations and get member pricing on Sam’s Club gas,” Walmart shared on its website.
In 2025, during Walmart Week, the chain’s response to Amazon’s Prime Days, Walmart offered a $0.50 off gas deal, according to a statement.
Walmart and Costco rival Kroger are using gas incentives to drive customers to their supermarkets. Just shared a new summer gas promotion.
More about Costco:
Kroger shared a new 4X Fuel Points promotion on June 8.
“Customers can earn 4X Fuel Points on every dollar spent every Friday from June 12 through July 24, and July 1-4, when they attach a digital coupon to the Kroger app or Kroger.com and make a purchase in-store, with pickup or delivery,” the company shared in a press release.
Customers earn one Fuel Point for every $1 spent in-store, but under the 4X promotion, they will earn four points per dollar spent. Every 100 points saves you $0.10 per liter, up to $1 per liter and up to $35 in savings.
You don’t need to be a member or pay to join Kroger’s program, but you do need to sign up for it.
Costco keeps its plan simple
RTMNexus CEO Dominic Miserandino believes that Costco will not be hurt by lowering prices faster than its competitors, because it makes it easier for members to get the lowest prices.
“Costco wins because its value proposition is completely uncontested. You show your card, and you get the lowest price in town right away,” he said.
Kroger has made its process more multi-step, he explained.
“Kroger’s model requires digital coupon clipping, tracking specific calendar windows like ‘4X Fridays,’ and monitoring point estimates. In a tough economy, jaded shoppers end up rejecting complex loyalty gamification,” he added.
Americans feel pain at the pump
Consumers are looking to save money on gas, with high gas prices forcing them to cut back elsewhere, according to a Numerator survey of more than 1,000 US consumers. Key findings included:
93% of drivers are there trying to save money on electricity.
36% select channels based on value over luxury.
61% say gas prices are which affects the ability to pay other expenses.
With gasoline prices averaging more than $4 per gallon, BMO Capital Markets Senior Economist Sal Guatieri explained that most Americans will have to spend less money elsewhere.
“In addition to undermining confidence, the increase will erode spending power, especially among low-income households. Gasoline and other fuels make up 2% of US consumption, so price increases, if sustained, would reduce annual spending by about 0.7%. That works out to more than $1,000 for the average American family,” he wrote.
Related: Costco is addressing its biggest customer pain points
This story was originally published by TheStreet on Jun 15, 2026, where it appeared first in the Marketing category. Add TheStreet as a favorite source by clicking here.
