How Costco sells such cheap gas

[haele]

2. That's about right. Even Franchise stations only make a little profit on the gas.

Here in San Diego, most gas stations are supplier company owned, and price at the pump is pretty much determined by the supplier. No matter if the station is company owed or part of the 10% private or franchisee owned, they all a contracted profit margin of 2 to 3% they can charge at the pumps to "avoid gas station wars"

Which is pretty much a white washing, because all the suppliers know the price of every station within two blocks of their delivery location, and raise or lower the price of their deliveries accordingly.
I'm not saying they collude to fix prices...but....

Costco (and other club stores or Commissaries) is supplying the gas at the pumps with the understanding that their pump costs will be the floor for that area.

Anyway, the actual profit for any individual gas station is gas station store. The gas station manager or owner can charge pretty much what they want outside any promotions suppliers are running. That's why that 99 cent listed bag of assorted stale bodega candy or tall can of Arizona drink costs anywhere from $1.50 to $3.00/2 for $4.00.