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Gas prices climbing past $4 a gallon nationwide, and above $6 along the West Coast, have sent drivers to an unlikely destination: Costco. The retailer told analysts this week that demand at its 747 fuel stations has hit a record in the company’s 50-year history. Some locations have needed tanker trucks called in multiple times a day just to keep up.
Costco Gas Runs About 30 Cents Cheaper Than Most Local Stations
Costco has long priced its gas around 30 cents below what nearby stations charge. That gap has always existed, but it carries a lot more weight when prices are elevated. A notable number of members pulled up to a Costco pump for the very first time this past quarter, the company said, suggesting the price difference was enough to change some long-standing habits.
Costco Makes a Profit on Gas, but Only a Few Cents Per Gallon
Costco’s per-gallon profit on fuel is measured in cents, well below the 25- to 35-cent markup that most independent stations depend on to stay afloat. Those operators need that margin to cover overhead and repairs. Costco does not, because fuel is just one piece of a much larger business built on volume and a membership model that generated roughly two-thirds of the company’s profit last year, according to Costco.
High Gas Prices Bring Costco More Customers but Thinner Margins
When pump prices rise, Costco sells more gas, but because fuel is a low-margin product, the increased volume actually compresses the company’s overall profit margin. Last quarter, gas subtracted two-tenths of a percentage point from gross margin, Costco said. When prices were lower, spending considerable time under $3 a gallon last year, gas added about a tenth of a point instead.
Rising Prices Actually Hurt Most Independent Gas Stations
The contrast with independent gas station operators helps explain why Costco’s model holds up under pressure. When prices go up, customers tend to buy less fuel, which limits how much revenue stations can generate even with higher per-gallon prices. Because those businesses depend on their markup to stay operational, reduced purchase volume cuts directly into their bottom line, leaving many struggling when prices climb.
Half of Costco’s Gas Customers Walk Into the Warehouse Afterward
Costco said roughly half of the drivers who fill up at its stations walk into the warehouse afterward. As pump visits hit record levels this quarter, foot traffic inside stores rose around 5%, and those customers spent more per trip as well. CEO Ron Vachris told analysts that members who use Costco gas stations typically spend more in the warehouse over time.
Costco Responded With Discounts on Meat and Eggs
Costco moved quickly to capitalize on the surge, extending discounts on meat and eggs to members this quarter. Both are stocked at the back of the warehouse, much like its $4.99 rotisserie chickens, a deliberate layout that nudges customers past other products on their way through. CFO Gary Millerchip described the move as an investment in member value, recognizing that members were dealing with higher costs.
How Middle East Tensions Pushed Crude Oil Above $100 a Barrel
CEO Ron Vachris pointed to events in the Middle East as the primary factor behind the price surge, referencing disruptions from the Iran war. The closure of the Strait of Hormuz, a key passage for global oil supply, pushed crude prices above $100 a barrel and sent pump prices past $4 across the country. The West Coast saw the sharpest increases, with prices climbing above $6 a gallon.
Costco Took In $2.3 Billion Less in Gas Sales in 2025
The relationship between gas prices and Costco’s revenue cuts both ways. Costco brought in $2.3 billion less in gas sales in 2025 than the year before, a period when prices had fallen considerably across the country. The current surge is a benefit for now, but the company acknowledged the gains could soften if conditions shift in the months ahead.
What the Record Numbers Actually Reveal About How Costco Members Spend
The record gas demand may say as much about consumer behavior as it does about Costco’s model. When prices climb, members fill up and shop more, spending more per visit, the company said. Costco’s stock fell nearly 4% on Friday, according to CNN, after analysts questioned whether the membership gains and increased warehouse traffic would hold once pump prices begin to ease again.