"Unlike most gas stations, which are small, independently owned and operated businesses – maybe with an attached convenience store or a repair shop – Costco can rely on its massive scale and membership model to drive profit.

Last year, membership fees accounted for roughly two-thirds of the company’s profit. Costco sells most of its products the same way it sells gasoline: at or just above cost – and sometimes below, like its famous $1.50 hot dog and soda deal.

Competing gas stations need the markup to pay for overhead and repairs."