March 27, 2026
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Should Costco Be Opening Members-Only Gas Stations?
Costco is opening its first standalone gas stations that are only accessible to the warehouse club members amid a spike in gas prices tied to the Iran war.
The first standalone station will open in California in Mission Viejo in June. At 17,000 square feet with 40 pumps, it will be Costco’s largest gas terminal yet, according to USA Today.
At least one second stand-alone station is scheduled open in Honolulu in 2027, per C-Store Dive. Costco hasn’t publicly responded on the openings.
Costco opened its first gas station in 1995, 12 years after opening its first store. In its last fiscal year, 747 of its 914 warehouses global had a gas station, with gas making up about 10% of total sales.
With prices often 5 cents to 40 cent below nearby competitors, Costco’s gas stations have been seen as traffic drivers to bring customers to their warehouse clubs. As March 26, GasBuddy data — according to CNBC — showed regular gas prices in various regions:
- Los Angeles: Costco, $5.39, traditional gas station per gallon, $5.95.
- Chicago: Costco, $4.29; traditional gas station per gallon, $4.48.
- Rochester, New York: Costco, $3.71; traditional gas station per gallon, $3.91.
In its fiscal second quarter ended Feb. 15, Costco’s gas comps were negative mid-single digits, driven by mid to high single-digit price deflation partially offset by gallon growth.
However, gas prices have spiked since U.S. and Israeli forces attacked Iran on Feb. 28. On Friday, the average U.S. gas price held at $3.98 per gallon, up from $2.98 cents a month ago and $3.16 a year ago, according to AAA.
Higher Gas Prices Can Be Favorable for Costco
Former Costco CFO Richard Galanti in 2022 said rising gas prices often lead to better fuel margins for Costco. Following general industry practices, when gasoline prices fall, Costco does not lower prices at the same pace it raises them when prices are climbing, he explained.
On a quarterly call on March 5, five days after the Iran war started, Gary Millerchip, Costco’s CFO, told analysts that when gas prices rise, fuel becomes a bigger traffic driver for Costco. He noted that “about half” of its members who use the Costco gas station will also make a purchase at the warehouse.
Millerchip said, “Generally speaking, if gas prices start to increase, then we tend to see our value proposition resonate better with members, just because obviously we want to be the pricing authority on gas. And so when prices are higher, that will tend to cause members to maybe take the extra mile that it might involve to get to the gas station because of the incremental value they see there. But, obviously, we will have to see what happens with gas prices over the coming months there.”
BrainTrust
Tom Ryan
Managing Editor, RetailWire
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Discussion Questions
What’s behind Costco’s strategy to open stand-alone gas stations? Is it a smart move?
Do you see Costco overall enjoying a big benefit should gas prices remain inflated?
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Anyone who has been to a Costco knows that the gas station is one of the most crowded areas, often with long lines that back up into the parking lot and cause snarls. A fair proportion of visitors are there just for gas. It makes sense, therefore, to have stand-alone stations in select areas both to take the pressure off store-based sites and to give the customer more convenience. This being Costco, it does not have to fear that such a move will reduce traffic to its stores: they are magnets in their own right.
It’s a good strategy on two fronts – current Costco members are reminded of their benefits and why they joined, and its an opportunity for Costco to grow their highly profitable membership base. Potential new members doing the quick math on joining for access to gas stations is if each fill trip saves them $6-$7 over other stations, annual membership is paid for in only 10 trips. Plus they get access to warehouse deals, a win.
As Neal noted, there are a lot of logistical reasons for simply relocating the existing store sites off site. Perhaps a more meaningful question is: should they go beyond s simple one-for-one replacement and actually open up a network of stations? (I’ll not venture there, for now, beyond noting that the members only policy might become much more of an issue with such a concept, removed from the tradtional customer base.)
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Anyone who has been to a Costco knows that the gas station is one of the most crowded areas, often with long lines that back up into the parking lot and cause snarls. A fair proportion of visitors are there just for gas. It makes sense, therefore, to have stand-alone stations in select areas both to take the pressure off store-based sites and to give the customer more convenience. This being Costco, it does not have to fear that such a move will reduce traffic to its stores: they are magnets in their own right.
It’s a good strategy on two fronts – current Costco members are reminded of their benefits and why they joined, and its an opportunity for Costco to grow their highly profitable membership base. Potential new members doing the quick math on joining for access to gas stations is if each fill trip saves them $6-$7 over other stations, annual membership is paid for in only 10 trips. Plus they get access to warehouse deals, a win.
As Neal noted, there are a lot of logistical reasons for simply relocating the existing store sites off site. Perhaps a more meaningful question is: should they go beyond s simple one-for-one replacement and actually open up a network of stations? (I’ll not venture there, for now, beyond noting that the members only policy might become much more of an issue with such a concept, removed from the tradtional customer base.)