Kroger and Costco both want to use cheap gas to get customers to their stores because gas prices have reached a tipping point that has impacted consumer spending.

With gas prices averaging more than $4 per gallon, BMO Capital Markets Senior Economist Sal Guatieri explained that most Americans will have to spend less in other areas.

“Apart from undermining confidence, the increase will erode spending power, particularly for lower-income households. Gasoline and other fuels account for 2% of U.S. personal consumption, so the price increase, if sustained, could cut annual spending by about 0.7%. That works out to more than $1,000 for the average American household,” he wrote.

An American Automobile Association (AAA) report from 2022, the last time the national average price for a gallon of gasoline was over $4, backs Guatieri’s comments.

“Americans may have reached a tipping point. Over half (59%) said they would make changes to their driving habits or lifestyle if the cost of gas rose to $4 per gallon,” AAA shared.

The high price of gas has been a foot-traffic driver for Costco. Now, Kroger wants to leverage its fuel rewards to do the same thing, and perhaps even steal some traffic from the warehouse club.

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Kroger makes customers a generous gas offer

Consumers are looking to save money on gas, and high gas prices are forcing them to cut back in another area, according to a Numerator survey of more than 1,000 U.S. consumers. Key findings included:

  • 93% of drivers are trying to save money on gas.
  • 36% choose stations based on price over convenience.
  • 61% say gas prices are impacting ability to afford other expenses.

Kroger’s fuel promotion is aimed squarely at those behavior shifts, turning rising gas sensitivity into store traffic.

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, as well as July 1-4, when they clip the digital coupon in the Kroger app or on Kroger.com and shop in-store, through pickup or via delivery,” the company shared in a press release.

Customers earn one Fuel Point for every $1 spent on groceries, but under the 4X promotion, they will earn four points for every dollar spent.

Every 100 points saves you $0.10 per gallon, up to $1 per gallon with a maximum of $35 in savings.

You do not need to be a member or pay to join Kroger’s program, but you do have to register for it.

The real difference between Kroger’s and Costco’s fuel strategies

TheStreet retail advisor and RTMNexus CEO Dominick Miserandino thinks Costco’s gas proposition will beat out Kroger’s.

“Wall Street looks at Kroger’s headline ‘Save up to $35’ fuel promo and thinks it’s a direct threat to Costco, but that completely misjudges the psychology of the modern consumer,” he said. “Costco wins because its value proposition is completely frictionless: you show your card, and you get the lowest price in town immediately.”

The grocery chain has made its process too many steps, he explained.

“Kroger’s model requires digital coupon clipping, tracking specific calendar windows like ‘4X Fridays,’ and monitoring point balances. In a tight economy, convenience-fatigued consumers eventually reject complex loyalty gamification,” he said.

Industry analysts make a similar point, but focus more on pricing itself.

“It doesn’t matter whether gas prices are $4 or $2 per gallon, consumers still want to find the best price possible. Retailers are constantly fighting to attract price-sensitive drivers to their stores, especially given that 35% of gas customers say that they also go inside the store after fueling,” Jeff Lenard, a long-time National Association of Convenience Stores (NACS) executive, said in a press release.

Costco’s gas stations do not take cash.

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Gas has been a driver for Costco

Costco reported record gas sales by volume during its third-quarter earnings call.

“All 3 4-week fiscal periods of the quarter set successive all-time company volume sales records with the final 5 weeks of the quarter becoming our top 5 volume weeks ever. Our gas team performed exceptionally well to manage this unprecedented demand, which requires multiple daily gas deliveries to many locations,” CEO Ron Vachris said.

He shared that higher gas prices nationally drove shoppers to Costco.

“The high consumer price sensitivity, which fueled these record volumes, also drove many members to use our gas stations for the very first time in the third quarter. We believe this will drive even greater loyalty with these members in the future as members who use our gas stations typically spend more with us in the warehouse,” he added.

Costco credit card holders get 5% cash back on gasoline purchased at the warehouse club on the first $7,000 spent, according to Citi, the company’s credit card partner.

As a consumer, I’m always tempted to make the drive to Costco when low on gas, but its distance from my house makes that impractical, even if I want to shop the warehouse club. That usually drives me to pick the next cheapest option, and that’s where Kroger may win some market share from the warehouse club.

Kroger has two edges over Costco

Costco’s gas prices may be lower than Kroger’s, but you can only use Costco’s pumps with a $65 Gold membership or a $130 Executive membership.

Kroger also has a massive size advantage, since the grocery chain operates more than 1,700 gas stations.

As of late May 2026, Costco operates 931 warehouses worldwide, including 639 in the U.S. and Puerto Rico. Costco also reported operating 747 gas stations at the end of fiscal 2025, according to Costco investor relations.

Kroger fuel centers’ proximity to the company’s supermarkets helps Kroger draw in shoppers and provide robust fuel benefits as part of its loyalty program, Ken Fenyo, a former Kroger executive who is now managing partner of Pine Street Advisors, told C-Store Dive.

“I think the various incentives they have make you more likely to go to a Kroger fuel center, but then also really [provide] an incentive to spend more with Kroger because you’re going to get that fuel discount on the back end,” Fenyo said.

Over the past three years, Kroger has tripled the number of gas stations it operates, according to its annual report.

Related: As consumers struggle, Costco sets a troubling record