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

Economics professor Todd McFall explains 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. 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.” Full Article