Everyone loves Costco, right? They have reputation for low prices, good customer service and good corporate governance. In fact, Costco is known for some of the lowest prices on common consumer goods like eggs, some kinds of milk and bananas. What drives this is Costco’s strict policy that they never mark up the costs of their goods more than 15% over their prices in order to ensure consumers have the best value.
But what do these low prices mean when it comes to Costco gas quality?
Cheap Gas, Yes. But What About Costco Gas Quality?
Per Consumer Reports.com, warehouse gas prices are typically between 5 and 25 cents per gallon less expensive (here). However, for most consumers, lower prices can often be perceived as a signal lower quality. This can call into question the quality of Costco’s black gold sold at its 692 gas stations.
Since Costco sells its gasoline for so much less than the competition, it’s natural to be skeptical and wonder if the quality is equal to brand-name gasoline such as Exxon, Shell, and Chevron. Most people want to know if Costco gas is good quality fuel, or if it might cause long-term damage to their fuel system.
The reason that Costco’s gas is less expensive is because of two reasons. First, Costco does a better job with controlling prices in its gasoline business than its competitors. In general Costco’s SG&A (selling, general and administrative) costs are lower than Walmart and Target (here). This means they can afford to keep prices low. Second, Costco’s business philosophy is to provide high quality goods at competitive prices. So, this means that in order to maintain their business growth, Costco needs to sell their gasoline for prices lower than the competition to keep people coming in their warehouse stores (per their 2023 annual report).
But, what about Costco’s gas quality?
Gas Quality Standards
First, it’s important to note that the Environmental Protection Agency (EPA) sets stringent standards for all gasoline sold in the United States (per 40 CFR Part 1090). When it comes to octane level and other specific gasoline characteristics, all gas is basically the same. The difference between the fuel that you buy at branded gas stations comes down to the detergents that are added to the gas.
Gasoline is basically an impure substance refined from impure base stock – crude oil. This means it is messy from a molecular chemical standpoint. And, as a result some gasoline leaves gunk around fuel injectors and intake valves. This can build up and reduce engine efficiency. To mitigate this, fuel producers add detergents, or chemicals to help break down semi-solids in gasoline. Detergents are typically amine-based, or alcohol-based (ethanol), sulfur, or zinc-based chemicals that have polar and non-polar groups in their molecular structure.
Even with detergents, the government sets standards. The federal government has required since 1995 that all gasoline sold in the U.S. must contain a certain amount of detergent additives. These additives are EPA approved, and the amount of detergent which must be added to keep vehicle engines free from deposits is regulated. Costco gasoline meets all these requirements, despite being so much cheaper than surrounding stations. Just because you are saving money, that does not mean that they have skimped out, or skirted any regulations.
Is Costco Gas As Good As the Competitors?
So, Costco meets the minimum requirements, but is it still as good as other brand-name gasoline?
A number of automakers made the decision that the U.S. government additive requirement wasn’t high enough for many cars. As a result, they developed a “Top Tier” standard. In order to meet the “Top Tier” designation, the fuel sold at the gas station must meet additive requirements higher than required by the U.S. government. Costco fuel meets this top-tier standard.
While Costco’s gas isn’t the same as the other brands, that does not make it a lesser product. After all, if it was the same exact gas, Costco wouldn’t be able to set itself apart. Costco gasoline is practically equal to any other major brand gasoline. You should not notice any difference when filling up your vehicle at Costco as you would with any other brand. The only difference you should notice is a much lighter hit to the wallet.
In addition, Costco has strict filtering requirements for their fuel, per their website:
Station Maintenance Good station operation and maintenance means the fuel is filtered and that contaminants, such as sediment and water, do not find their way into our members’ vehicles. Costco fuel stations are well-maintained by our capable attendants so you may be confident that the fuel going into your vehicle is clean.
- Costco uses fuel filters to catch particles or debris larger than 10 microns in diameter. For comparison, the average human hair is seventy microns thick.
- Our attendants check the nozzle flow rate frequently to assure that our filters are fresh. When the flow rate falls below 8 gallons per minute, we change the filter.
- Costco uses ethanol-compatible filters designed to catch sediment, water, or phase-separated ethanol and water mixtures.
- Costco’s electronic sensors continuously monitor our underground storage tanks for water.
- We physically inspect and take chemical samples of our tanks at least weekly to confirm there is no contamination.
Source: Costco.com.
Get Better Gas Quality and Save Money
If you aren’t sure that Costco gasoline is as good as another major brand’s, try this “gas hack” to save money. In most areas of the country, you can fill up at the Costco gas station, plus add quality fuel injector cleaner. Chevron sells good fuel injector cleaner, so does STP. You can get Chevron’s fuel injector cleaner on Amazon, here. You can also click on the photo below.
If you add this fuel injector cleaner as recommended, you will still pay less for Costco gas and the fuel injector cleaner, than you would on gas alone at a major brand gas station.
This, though, is more of a peace-of-mind improvement. Most mechanics will tell you that fuel injector cleaner really doesn’t do much, so maybe just enjoy the savings that come with your yearly membership.
In the end, there is nothing to suggest that Costco brand fuel is inferior to any other brands of gasoline. Don’t let the price alone dissuade you from filling up there.
From Around The Web
If you’re interested in some fun gasoline reading, check out this story of a guy who figured out how to turn off the ads at the gas pump. And, here is the story of a guy who made $900 using the cash back gas app, Upside. The best part is, he donated the $900 to buy gas for some nurses. The story is here.
Read More From Saving Advice:
Costco Gas Calculator: Will I Save Money Buying a Membership if All I Buy is Fuel?
The Getting Costco Gas? Don’t Forget To Check Their Holiday Schedule
Open Earlier and Closed Later – Costco Gas Station Hours
Is A Costco Membership Worth It When Living Alone?
(Photo courtesy of Adam Keys)
Do you fill up at Costco gas stations? What do you think about the gas quality?
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.
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