Costco gas prices draw record demand as fuel costs rise
Costco says fuel demand hit records as cheaper gas helps drive member visits, warehouse spending and renewals.
By Amanda Ross · Deals Correspondent
· 3 min read
Costco gas prices are pulling more members to the pump as U.S. fuel costs rise, with the retailer reporting record gasoline demand in its fiscal third quarter ended May 10. Costco did not disclose fuel sales figures, but CEO Ron Vachris said on the company’s earnings call that some warehouses required several gasoline deliveries a day and that the quarter’s final five weeks were its busiest fuel-volume period on record.
The surge comes as CNBC has reported that gasoline prices are rising again after a sharp escalation of the war in Iran. Mike Baker, managing director and head of consumer research at D.A. Davidson, said U.S. gasoline consumption has been broadly flat as higher prices lead some drivers to reduce use, while Costco has recorded double-digit growth in gallons sold.
Why are Costco gas prices lower?
Costco uses discounted gasoline as part of a membership-driven retail model: cheaper fuel gives members another reason to visit, and those visits can translate into warehouse purchases and renewals. A Gordon Haskett study using GasBuddy data found that from April 2025 through March 2026, Costco’s gasoline prices were typically 9 cents a gallon below the five largest local competitors and 24 cents below the state average.
That pricing gap is not designed only to compete with standalone gas stations. Costco executives have linked the fuel offer to the broader economics of the warehouse club, where annual membership fees are central to profitability. The company generated more than $5 billion from membership fees in 2025, an amount equal to roughly two-thirds of its net income.
CFO Gary Millerchip told investors that members who buy gasoline at Costco generally come to the retailer more often, spend more overall and renew memberships at higher rates than other members. He also said a little less than half of members who stop for gas also go into the warehouse during the same trip.
Baker said the fuel strategy helps preserve the value proposition of membership. In his view, membership is the core of Costco’s business model, and discounted gasoline reinforces the idea that paying the annual fee produces recurring savings.
How the fuel discount can affect shoppers
For households already paying for a Costco membership, the gasoline discount can reduce the cost of a planned fuel purchase. The consumer impact depends on behavior around the trip: a member who buys only gas captures the pump savings, while a member who adds unplanned warehouse purchases may give some of those savings back through extra spending.
Lucas Bucl, a certified financial planner and founder of Level Up Financial Planning, described Costco’s approach as a traditional retail tactic, using a conspicuous deal to bring customers in. He said retailers understand that impulse purchases can lead shoppers to spend on items they had not planned to buy.
Bucl recommended that shoppers make a list before entering the warehouse if the goal is to preserve fuel savings. He said combining a gasoline stop with a planned warehouse trip can be useful when it replaces a separate errand, but cautioned against browsing the aisles without a plan.
The figures show why Costco has an incentive to keep the fuel offer prominent. Discounted gasoline can defend the perceived value of a paid membership while also increasing store traffic, a mechanism that matters more when volatile energy prices make consumers more attentive to the cost of filling a tank.
This story draws on original reporting from CNBC.
