The Puyallup Indian tribe owns the Tahoma Market Shell gas station in Fife. This station seems to be ground zero for demonstrating that Indian gas stations undercut private, non-tribal operators. I was there yesterday for a KOMO TV interview in their parking lot. They undersold their sister (non-tribal) Shell station just across the freeway by 24 cents per gallon!

Kelly Croman, a Puyallup tribal attorney, is very fond of saying that they charge the same as discount gas stations like Costco.

There are a couple of problems with her claim.

First, it is not true. I checked.

The Costco up the road from the Tahoma market sold regular unleaded fuel for $3.659 per gallon yesterday. The Tahoma Market sold regular unleaded fuel for $3.519 per gallon yesterday. That is 14 cents less than Costco. I checked again today. The Tahoma Market is 10 less than Costco. 

There are other problems with her claim. Discount centers like Costco are able to charge less for fuel for two reasons...

Every fuel station operator purchases fuel from a distributor. That fuel is either branded or unbranded. Wholesale discount centers like Costco purchase unbranded fuel, which is generally cheaper than purchasing gas from major brands like Shell. The Tahoma Market is affiliated with a major brand (Shell) and they pay a premium for fuel at the distribution level. This means the Tahoma Market should be pricing similar to other branded Shell stations, which have to pass on the premium that comes with a branded offering, rather than pricing below the wholesale discount centers offering cheaper unbranded fuels.

Finally, Costco is able to charge less because their members pay for it in other ways. This means fuel prices are subsidized by members who pay monthly or annual dues or higher prices for other goods. Despite their claim is completely false, it is ironic that tribal officials say their fuel stations sell fuel at prices that are comparable to wholesale discount centers like Costco, because they virtually admit that tribes enjoy their own subsidy.

It is likely the Tahoma Market is selling gas at a loss. On the left hand, the tribal station loses money. On the right hand, the tribe receives millions in gas taxes back from the state. As long as the right hand is making more money than the left hand loses, the tribe will continue the unfair practice.

Read our full Policy Brief here

Watch the KOMO 4 News story here