{"id":1017,"date":"2026-06-01T20:03:13","date_gmt":"2026-06-01T20:03:13","guid":{"rendered":"https:\/\/arizonamovinginsider.com\/?p=1017"},"modified":"2026-06-01T20:03:13","modified_gmt":"2026-06-01T20:03:13","slug":"costco-sees-record-gas-demand-in-50-years-as-prices-surge","status":"publish","type":"post","link":"https:\/\/arizonamovinginsider.com\/?p=1017","title":{"rendered":"Costco sees record gas demand in 50 years as prices surge"},"content":{"rendered":"
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In its 50-year history, Costco has never seen such demand for gas.<\/p>\n

Many of its stations have been so overwhelmed that they\u2019ve had to call in tanker trucks multiple times a day to avoid running dry, Costco said this week during its quarterly earnings call. A growing number of customers are buying just enough to top up their tanks, concerned about what tomorrow\u2019s prices may be.<\/p>\n

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As prices have surged above $4 nationwide \u2013 and above $6 along the West Coast \u2013 Costco has become America\u2019s destination for cheap gas. Well, relatively. Costco routinely undercuts local gas stations by around 30 cents a gallon.<\/p>\n

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That\u2019s an enticing bargain at any time, although long lines sometimes dissuade customers, especially when gas is inexpensive. <\/p>\n

Not now: A significant number of Costco members filled up for the very first time over the past three months, Costco said on that earnings call.<\/p>\n

How \u2013 and why \u2013 does Costco sell gas for so cheap? It\u2019s all about chickens. Well, kinda.<\/p>\n

Costco actually makes a profit on gas \u2013 a few cents per gallon. That\u2019s substantially lower than the 25- to 35-cent markup that most gas stations take.<\/p>\n

Unlike most gas stations, which are small, independently owned and operated businesses \u2013 maybe with an attached convenience store or a repair shop \u2013 Costco can rely on its massive scale and membership model to drive profit.<\/p>\n

Last year, membership fees accounted for roughly two-thirds of the company\u2019s profit. Costco sells most of its products the same way it sells gasoline: at or just above cost \u2013 and sometimes below, like its famous $1.50 hot dog and soda deal.<\/p>\n

Competing gas stations need the markup to pay for overhead and repairs. When gas prices rise, customers buy less of it, keeping a relative cap on the amount they\u2019re able to charge.<\/p>\n

That\u2019s why, ironically, when gas prices are high, most gas stations struggle to make money.<\/p>\n

Costco has a different problem: When gas prices are high, Costco sells more gas. But, because gas is among its lowest-margin products, the company\u2019s overall profit margin gets squeezed. The opposite is true when prices are low.<\/p>\n

Last year, when prices spent a considerable amount of time under $3 a gallon on average, gas added about a tenth of a percentage point to the company\u2019s gross margin. Last quarter, gas subtracted two tenths of a point.<\/p>\n

Nevertheless, it\u2019s a good problem to have. Costco said it brought in $2.3 billion less in gas sales in 2025 than the year before because prices got cheaper.<\/p>\n

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Costco has 747 gas stations, which brought in 10% of its overall sales last year.<\/p>\n

Where do the chickens come in?<\/p>\n

Costco says about half of its filler-uppers end up walking into a warehouse. As a record number of members visit Costco\u2019s gas stations, foot traffic at stores increased around 5%. And customers are buying more when they shop, too.<\/p>\n

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\u201cWe 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,\u201d said Costco CEO Roland Vachris on a conference call with analysts Thursday, during which gas was mentioned 72 times.<\/p>\n

Vachris said customers were stretched this past quarter, because they were allocating a higher percentage of their paychecks to gas. But that gave Costco an advantage: its competitive prices.<\/p>\n

Among its best-selling how-can-they-sell-it-this-cheap products: rotisserie chickens, which Costco sells for $4.99 \u2013 way undercutting local supermarkets. And they\u2019re sold at the back of the warehouse, forcing customers to navigate the aisles \u2013 and probably pick up some other items along the way.<\/p>\n

Recognizing the moment, Costco extended discounts on meat and eggs (also sold at the back of the warehouse) to members to drive more customers into the warehouses.<\/p>\n

\u201cWe saw it as an opportunity, recognizing that our members were dealing with higher gas prices, to really invest in increasing value to the member,\u201d said Gary Millerchip, Costco\u2019s chief financial officer, on the call.<\/p>\n

The question is whether Costco can hang onto those gains when gas prices fall again. The trends work in Costco\u2019s favor when gas prices rise \u2013 but they work in reverse when they fall.<\/p>\n

The company remains hopeful that the momentum it built in recent months can continue to, even if gas prices fall.<\/p>\n

\u201cOver time, it\u2019s a great way to build loyalty,\u201d Millerchip said. \u201cWe do think it\u2019s a good, healthy barometer of long-term growth for the business.\u201d<\/p>\n

Analysts were skeptical. So were investors. The stock fell nearly 4% Friday.<\/p>\n

The-CNN-Wire\u2122 & \u00a9 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.<\/i><\/p>\n

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In its 50-year history, Costco has never seen such demand for gas. Many of its stations have been so overwhelmed that they\u2019ve had to call in tanker trucks multiple times a day to avoid running dry.<\/p>\n","protected":false},"author":1,"featured_media":1016,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":["post-1017","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-scripps-news-life"],"yoast_head":"\nCostco sees record gas demand in 50 years as prices surge - Arizona Moving Insider<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/arizonamovinginsider.com\/?p=1017\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Costco sees record gas demand in 50 years as prices surge - Arizona Moving Insider\" \/>\n<meta property=\"og:description\" content=\"In its 50-year history, Costco has never seen such demand for gas. 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