Costco Seeing Unprecedented Gas Demand as Prices Surge
Costco saw unprecedented gas demand requiring multiple daily tanker deliveries as prices surged above $4 nationwide and $6 on the West Coast.
Objective Facts
Costco reported unprecedented demand for gas as prices surged above $4 nationwide and $6 on the West Coast, with stations so overwhelmed they required multiple daily tanker trucks to avoid running dry during the company's fiscal third quarter ending May 10. CEO Ron Vachris said the unprecedented demand drove many members to use gas stations for the very first time in the quarter, with Vachris noting that members who use gas stations typically spend more in the warehouse. The Iran war disrupted energy markets, pushing gas prices above $4 nationally as the closure of the Strait of Hormuz constrained global oil supplies and sent crude prices above $100 a barrel. Costco's membership model allows it to undercut competitors by around 30 cents per gallon while relying on membership fees for profit, with about half of gas customers also shopping in the warehouse.
Left-Leaning Perspective
The Washington Post reported the war in Iran is driving a sharp increase in inflation, as surging gasoline prices ripple through the American economy, dealing a blow to a White House that has staked its economic credibility on bringing costs down. Left-leaning coverage emphasizes consumer hardship rather than retail opportunity. Moody's chief economist Mark Zandi told CNBC that Americans have spent nearly $450 extra per household on rising energy costs during the Iran war, cumulatively costing consumers nearly $60 billion. NPR reported Walmart's Chief Financial Officer John David Rainey said filling up with fewer gallons at a time is "an indication of stress," with the lower-income consumer being "more budget-conscious and perhaps navigating financial distress." Progressive outlets frame the gas price surge as profiteering by oil companies rather than legitimate market forces. The League of Conservation Voters argued that oil companies are taking advantage of chaos in international oil markets to artificially jack up prices, with the world's top 100 oil and gas companies making $30 million an hour in excess profits. Senator Sheldon Whitehouse and Rep. Ro Khanna introduced the Big Oil Windfall Profits Tax Act, under which large oil companies would pay a tax on each barrel above average 2025 prices, with revenue returned to customers as $216 to $324 annual rebates. Left-leaning coverage largely omits positive framing of Costco's business performance or the membership model's efficiency, instead focusing on consumer hardship, corporate profiteering, and policy solutions like windfall profits taxes rather than celebrating how market competition (Costco's lower prices) benefits consumers.
Right-Leaning Perspective
Barchart and investment-focused outlets present Costco as a beneficiary of high gas prices, arguing its low-priced gas stations have 'helped attract more shoppers to its warehouses, boosting both foot traffic and high-margin discretionary spending.' Right-leaning and business-focused coverage emphasizes Costco's strength and competitive advantage during economic uncertainty. The Motley Fool noted that discount retailers and warehouse stores are generally good retail bets when people are worried about the economy, 'with plenty to be concerned about right now, when you also factor in higher prices from tariffs, inflation that remains high, and a slowing labor market.' Conservative outlets highlight the membership model as superior: RetailWire noted that the club format makes most of its profits from membership fees rather than product margins, allowing it to aggressively price key traffic-driving categories like fuel, and that stand-alone fuel stations simply extend that philosophy beyond the warehouse footprint. Barchart reported the 'resilience' is catching attention of prominent investors including President Donald Trump, with Costco shares climbing to a record high of $1,096.50 on May 19. Right-leaning coverage downplays consumer hardship, emphasizing instead how market forces allow efficient companies like Costco to thrive and serve customers, while omitting serious discussion of inflationary spillovers to broader products or working-class budget stress.
Deep Dive
The core story is that Costco saw unprecedented gas demand requiring multiple daily tanker deliveries as national prices surged above $4 and West Coast prices hit $6, driven by the Iran war and closure of the Strait of Hormuz, which constrained global oil supplies. Costco's membership model allows the company to operate differently than independent gas stations: membership fees accounted for roughly two-thirds of company profit, and Costco sells most products at or just above cost, sometimes below, in contrast to stations that need markup to cover overhead. Ironically, when gas prices rise, most gas stations struggle to make money because customers buy less, but Costco sells more gas and benefits from volume, though overall profit margins get squeezed because gas has among its lowest margins. Both perspectives capture legitimate realities: consumers are "going out of their way for discounted fuel" and "willing to drive further and wait in line longer to buy cheaper gas," with many "increasing their frequency of visiting the gas station to top up in between what would have normally been a gap" due to "concern about what might the gas price be tomorrow," demonstrating genuine distress. Simultaneously, Costco attracted thousands of first-time gas station users who historically spend more in warehouses and renew memberships at higher rates, creating a real long-term business advantage. The unresolved question is whether this advantage reflects market efficiency rewarding good management or whether consumer behavior driven by financial desperation reveals broader economic inequality. Costco and Walmart executives warned that higher gas prices will eventually lead to higher prices on store shelves as fuel costs ripple through transportation and supply chains, suggesting near-term gains may not be sustainable.