Costco Benefits as Rising Gas Prices Drive Traffic, Fueling In-Store Sales
Rising gasoline prices are sending more consumers to Costco for cheaper fuel, but the real winner is the retailer itself, experiencing a significant boost in in-store traffic and sales. As geopolitical tensions contribute to soaring oil prices, Costco’s value proposition is resonating strongly with members.
Gas Price Surge and Costco’s Advantage
As of Friday, March 21, 2026, the national average for a gallon of regular unleaded gasoline was $3.91, according to AAA , still below the all-time high of $5.02 in April 2022, but up roughly $1 per gallon over the past month. Price variations exist across states, with New York approximately 13 cents below the national average and California about $1.75 above.
Jeff Marks, director of portfolio analysis for the Investing Club, noted that increased pump prices historically benefit Costco. “People proceed maybe the extra mile or two to get that lower price, and while they’re at the gas station, they’ll take a look in the store,” he said.
Costco’s CFO, Gary Millerchip, forecasted during the most recent earnings call on March 5, 2026, that the company would benefit from higher oil prices, stating that its value proposition resonates better with members when prices increase. Costco typically offers gas prices at a 9-cent-per-gallon discount versus the top five local competitors and a 24-cent discount versus the state average, according to Gordon Haskett.
Increased Foot Traffic and In-Store Spending
Analysis from Gordon Haskett shows a “sharp inflection” in visits to Costco gas stations in the week ended March 7, 2026, accelerating as prices rose. The “cross-hop” rate from fuel customers to in-warehouse shopping remains at 50%, meaning half of those filling up also make purchases inside the store. JPMorgan analysts also highlighted Costco as a beneficiary of higher gas prices, noting that elevated prices drive trips to the club.
Geopolitical Factors and Oil Prices
The recent surge in oil prices—and gas prices—stems from supply disruptions due to the Mideast conflict, which has effectively closed the Strait of Hormuz, a critical oil transport route off Iran’s coastline.
As of Friday, March 21, 2026, Brent crude, the international oil benchmark, rose 2% and approximately 10% week-to-date. West Texas Intermediate (WTI) crude, the U.S. Oil standard, also rose 2% on Friday but remained relatively flat for the week. Both Brent and WTI briefly exceeded $119 on March 9, 2026. Since February 28, 2026, Brent has gained roughly 50%, and WTI has surged 45%.
Economic Implications and Costco’s Resilience
Rising gas prices put financial pressure on consumers, leading them to seek bargains at Costco and potentially cut back on non-essential spending. Prolonged elevated gas prices could reignite inflation and slow economic growth, as two-thirds of U.S. Gross domestic product growth is driven by consumer spending. This environment led the Federal Reserve to hold interest rates steady at its recent policy meeting and may hinder further rate cuts this year.
Despite these challenges, Costco is expected to perform relatively well due to its commitment to maintaining stable prices.
Stock Performance
Despite a 1% pullback over the past month, Costco’s stock is poised for further gains. Shares have increased 13% year-to-date, outperforming the S&P 500, which was down roughly 5% as of Friday afternoon trading. Analysts have a $1,100 price target for Costco, representing a 13% upside from Thursday’s close.