Ask Sam: How can Costco sell gas so much cheaper than other stations?
Automobiles

Ask Sam: How can Costco sell gas so much cheaper than other stations?

Q: I bought gas recently at Costco and regular was $3.07 per gallon. How can Costco sell gas for this price and other stations are selling it for $3.41 to $3.49 per gallon? I know Costco is not losing money selling gas at this price. R.P.

Answer: Todd McFall, an economics professor at Wake Forest University, explained how Costco can afford to charge less than other gas stations.

“All Costco purchases, from gasoline to granola bars to grapes, fall under what’s known as a two-part tariff. Part One is the membership. That purchase gets customers access to goods and services Costco sells. Costco purports to use those funds to offset lower per unit costs on what it sells, including gasoline.

“Part Two is where the customer decides to what extent they want to go to incorporate Costco wares into their lives. The more they buy, the lower the per purchase price of the membership becomes,” he said.

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You don’t need a membership to buy gas at other stations. You drive in and buy the gas.

“The most appropriate way to think about Costco gas prices is that each gallon is the advertised price PLUS some additional cost from the membership,” McFall said.

“Does this bridge the difference between Costco and a typical station? That depends on how many Costco purchases the customer makes.”

McFall said that rewards programs that some stores have for their customers, that offer money off gas purchases are the opposite of membership.

“The more rewards a customer earns, the cheaper a gallon of becomes, perhaps inching close to the advertised Costco price,” he said.







A person pumps gas at a Shell gas station on August 3, in Austin, Texas.




BBB issues warning about hotel booking scams

Now that the summer travel season is here, the Better Business Bureau is warning travelers of hotel booking scams that they have been hearing about on the bureau’s ScamTracker.

BBB recommends that people making reservations confirm that the website they are on is the official website of the hotel that you are trying to make reservations at or an authorized booking agency.

“Scammers are pros at building fake lookalike websites to fool you into giving up your information. Look closely at the URL to ensure you are on the hotel’s official website or a booking agency you know and trust,” BBB said in a press release.

Make sure that the website is secure, and that the pages and payment pages are also secure. If you can’t confirm the security of the website, do not enter any personal or banking information.

“One consumer reported this experience on BBB Scam Tracker: ‘When searching the web for a particular hotel, the hotel’s logo appears on their website. You think that you are contacting the hotel that you searched for, but you are not.

“They are a third party that operates under the guise of being associated with the hotel. They told me they handle overflow calls for the hotel, not true. In addition to the cost for the hotel, they assess a $16 “service” fee without advising you,’” BBB said.

To help increase awareness of scams and stop scammers, report a scam when you see it. Go to BBB.org/ScamTracker and click on Report a Scam.







Yellow scam alert sign




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