Costco Sees Surge in Gas Demand Amid Rising Prices

Costco’s gas stations experienced a significant increase in demand during the last quarter, as consumers sought more affordable fuel options, leading to sales that surpassed market predictions.

CEO Ron Vacris noted that consumers are actively searching for budget-friendly alternatives due to tight household finances, especially amid ongoing economic uncertainty, which has attracted more members to their gas stations.

“This was particularly clear in our gas business this quarter,” Vakris remarked. He cited the ongoing situation in the Middle East as a factor affecting fuel supply and prices. “We’re committed to serving our members by keeping our inventory steady and offering the best prices,” he added.

The company achieved record-breaking sales, with each four-week period of the quarter exceeding previous volumes and the last five weeks marked as the highest sales weeks in Costco’s history.

Vacris praised the efforts of the Costco team in managing the logistics required to meet this surge in demand. “It meant multiple gas deliveries every day across many locations,” he explained.

The closure of the Strait of Hormuz has limited global oil supplies, pushing oil prices over $100 per barrel. The conflict in Iran has also contributed to a spike in U.S. gasoline prices, surpassing $4 per gallon and causing upheaval in the energy market.

According to the latest AAA data, the national average price for a gallon of regular gasoline was $4.39 last Friday, reflecting a 38% increase from a year earlier when prices averaged $3.17.

Vakris pointed out that the competitively priced gas at Costco stations is likely to attract new members and customers to their stores, which could enhance the wholesale club’s sales momentum in the future.

“A lot of our members are really price-sensitive right now, and that drove these record sales volumes. Many members used our gas stations for the first time this quarter,” he said. “Members who fill up at our stations generally spend more in our warehouses, increasing their loyalty.”

Costco’s chief financial officer, Gary Millerchip, noted that the increased gas sales volume enables the company to maintain a lower price difference compared to other higher-cost stations, fully recognizing that this is a significant concern for their members.