Costco Wholesale Corporation

NASDAQ Global Select
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Somewhat Bullish +50

Costco sees record gas demand in 50 years as prices surge

AI-generated analysis

📈 Costco reported record gas demand in its 50-year history as prices surged above $4 nationwide and over $6 on the West Coast.

⛽ Many stations were so overwhelmed they had to call tanker trucks multiple times daily to avoid running dry.

💰 Customers are buying just enough to top up tanks due to concerns about future price increases.

🏆 Costco has become America's destination for cheap gas, routinely undercutting local stations by around 30 cents per gallon.

🐔 The low markup on gas is part of Costco's strategy where membership fees account for roughly two-thirds of the company's profit.

📉 When gas prices are high, Costco sells more volume but its overall profit margin gets squeezed because gas is a low-margin product.

📊 Last year gas added about 0.1 percentage points to gross margin, whereas last quarter it subtracted 0.2 percentage points.

💵 Costco brought in $2.3 billion less in gas sales in 2025 than the previous year because prices were cheaper.

🛒 About half of customers who fill up at Costco stations end up walking into a warehouse, driving store foot traffic up around 5%.

🍗 Costco sells rotisserie chickens for $4.99 and extended discounts on meat and eggs to drive more customers into warehouses.

👨‍💼 CEO Roland Vachris noted that gas was mentioned 72 times during the earnings call, highlighting its strategic importance.

📉 The stock fell nearly 4% Friday as investors remained skeptical about whether Costco can maintain gains when gas prices fall again.

🤝 CFO Gary Millerchip stated that building loyalty through competitive pricing is a healthy barometer for long-term business growth.

🚛 Stations have been overwhelmed with demand, requiring multiple tanker truck deliveries to avoid running dry.

📉 Gas prices rising causes most stations to struggle, but ironically benefits Costco by increasing volume and foot traffic.

🏢 Costco has 747 gas stations which brought in 10% of its overall sales last year.

🛒 Customers are buying more when they shop at warehouses due to increased foot traffic from gas station visits.

📉 Analysts were skeptical about the sustainability of these gains if gas prices fall again.

Bullish Signals
  • Costco has never seen such demand for gas in its 50-year history, with stations overwhelmed to the point of calling in tanker trucks multiple times a day.
  • A significant number of Costco members filled up for the very first time over the past three months as prices surged above $4 nationwide and above $6 along the West Coast.
  • Costco's massive scale and membership model allow it to drive profit on gas despite low margins, with membership fees accounting for roughly two-thirds of the company's profit last year.
  • Foot traffic at stores increased around 5% as a record number of members visit Costco's gas stations, leading customers to buy more when they shop.
  • CEO Roland Vachris noted that competitive prices will drive even greater loyalty with these members in the future, as members who use gas stations typically spend more in the warehouse.
  • Costco extended discounts on meat and eggs to members to drive more customers into the warehouses, recognizing the opportunity to invest in increasing value during higher gas prices.
  • CFO Gary Millerchip stated that the current trends work in Costco's favor when gas prices rise and view this as a good, healthy barometer of long-term growth for the business.
Risk Factors
  • Gas prices rising above $4 nationwide and over $6 on the West Coast have ironically squeezed Costco's profit margins because gasoline is sold at or just above cost with a significantly lower markup than independent stations.
  • High gas demand subtracted two-tenths of a percentage point from gross margins last quarter, compared to adding a tenth when prices were under $3.
  • Analysts and investors expressed skepticism about the sustainability of gains driven by high gas prices, noting that trends favoring Costco reverse when gas prices fall.
  • The stock fell nearly 4% following the earnings report due to investor concerns over the sustainability of these margin dynamics.
Full Analysis
Costco reported record demand for gasoline at its fuel stations during the most recent quarter, driven by surging prices that have pushed costs above $4 nationwide and over $6 on the West Coast. The retailer noted that many of its 747 locations had to call in tanker trucks multiple times daily to avoid running dry as customers rushed to fill tanks before prices potentially rose further. This high demand for fuel, which accounts for roughly 10% of Costco's overall sales, has ironically squeezed the company's profit margins because gasoline is sold at or just above cost with a significantly lower markup than independent stations. While gas prices rising increases volume and foot traffic—leading to an estimated 5% increase in warehouse visits—the low-margin nature of fuel means it subtracted two-tenths of a percentage point from gross margins last quarter, compared to adding a tenth when prices were under $3. To capitalize on the increased foot traffic generated by high gas prices, Costco extended discounts on meat and eggs, products strategically placed at the back of warehouses to encourage additional purchases. CEO Roland Vachris highlighted that members allocating a higher percentage of their paychecks to fuel are drawn to Costco's competitive pricing, fostering loyalty that typically translates to higher spending within the warehouse. However, analysts and investors expressed skepticism about the sustainability of these gains, noting that the trends favoring Costco reverse when gas prices fall, which contributed to the stock falling nearly 4% following the earnings report.