The ongoing conflict in Iran and normal seasonal demand increases have caused gas prices to climb.
“Spring Break season is here as the national average for a gallon of regular gasoline jumped nearly 35 cents since last week,” according to data from AAA.
- March 12 National Average: $3.59
- One Week Ago: $3.25
- One Month Ago: $2.94
- One Year Ago: $3.08
That’s an opportunity for Costco, which has used low gas prices as a way to entice people to join the warehouse club.
“You save approximately 20 cents a gallon at Costco over other local vendors,” David Schwartz, who, together with his wife Susan, authored “The Joy of Costco,” told CNBC. “That’s something we have seen time and time again across the country.”
Costco has a plan for rising gas prices
As gasoline prices fall, Costco does not lower prices at the same pace it raises them when prices are climbing. This allows the company to recoup some of the profits lost by doing the reverse when prices were rising.
In theory, that alleviates some of the pain at the pump for Costco members as prices rise.
Former Costco CFO Richard Galanti defended that practice during the warehouse club’s gas business during its second-quarter earnings call.
“I think part of that story has been thrown away because it seems that not only us, but the supermarket retailers and other discount retailers that operate large numbers of gas stations, they’ve been able to use it too. As prices went up or went, even went down a little bit, they didn’t go down as fast as perhaps they could have been, which gives us, in our view, an ability to make a little more and still be the most competitive,” he said.
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Costco’s gas can be worth a membership
Costco sells its Gold membership for $60. If you assume $0.20 per gallon in gas savings, then the math on making joining the warehouse club worth it just for gas is simple.
Every five gallons saves you $1, so 50 gallons is $10 in savings, and 300 gallons equals the price of your membership. As gas prices rise, Costco customers are also more willing to drive farther to visit the chain’s pumps.
Former Costco CFO Richard Galanti shared more color on the chain’s gas pricing during its fourth-quarter-earnings call.
“Everybody seems to be wanting to make more in gas, which allows us, in our view, to make a little more and still be even more profitable,” he said.
“We’ve seen our competitive spread versus our direct competitors at every location, on average, improve over the last couple of years to now be in the — I want to say the $0.30 range per gallon. Thirty is the average, which is up. It’s an average, and it can range from 10 to 45.”
Related: History of Costco: Company timeline and facts
Costco also has a new gas strategy
While it’s a new plan for the chain, Costco has added standalone gas stations to its portfolio. It has one in California and plans another location in Hawaii.
“The Costco gas station is expected to have 20 fueling islands with 40 gas pumps, according to a report from local station KITV News. It is also about a mile from a traditional Costco Wholesale store that includes a Costco gas station,” Grocery Dive reported.
GlobalData Managing Director Neil Saunders believes that Costco could add to its list of standalone gas stations.
“Costco gas is wildly popular with members because of the cheaper prices. If successful, there are other locations where this could be implemented,” according to Arizona Republic.
Gas is a massive driver for Costco.
“The number of warehouses with gas stations varies significantly by country. “We operated 747 gas stations at the end of 2025. Our gasoline business represented approximately 10% of total net sales in 2025,” the chain shared in its annual report.
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