Drivers are increasingly making detours to Costco and Walmart to take advantage of discounted gasoline, with many of these customers visiting for the first time. Executives at these retail giants reported record fuel sales and a notable shift in consumer behavior as gas prices continue to climb. This trend highlights the significant impact of elevated fuel costs on household budgets and shopping habits across the nation.
Costco, in particular, has experienced unprecedented demand at its fuel stations. Executives told investors on a call Thursday that as the U.S. war in Iran continues to drive up gas prices, Costco's gas stations have been selling record amounts of fuel. In fact, Costco had never sold as much gas as it did between April and mid-May, CEO Ron Vachris said, with stations having to get multiple daily gas deliveries to keep up. Members are visiting gas stations more frequently, topping up their tanks in between usual fill-ups due to concerns about potential price increases. "A lot of members are increasing their frequency of visiting the gas station to top up in between what would have normally been a gap between getting the tank to empty because of the concern about what might the gas price be tomorrow," said Gary Millerchip, Costco's finance chief. He added that this behavior is an "indication of stress."
Walmart has also observed changes in how consumers purchase fuel. In recent weeks, customers at Walmart's gas stations have begun filling up with fewer than ten gallons at a time, a pattern not seen since 2022. "That's an indication of stress," Chief Financial Officer John David Rainey told investors last week. Rainey further elaborated on differing consumer behaviors, stating, "We see with our customers that the high-income customer is spending with confidence, while the lower-income consumer is more budget-conscious and perhaps navigating financial distress."
Similar trends are evident at other discount fuel retailers. The discount gas-station chain Murphy USA also told investors in late April that it had started to draw more first-time shoppers. "We're also seeing lapsed customers returning to our stores," said CEO Mindy West. "They're changing their behavior and becoming more value-seeking shoppers."
The average price for a gallon of regular gasoline stood at $4.39 on Thursday, according to AAA. This represents a substantial increase of $1.22 compared to the previous year. Consequently, Americans are allocating a larger portion of their income to fuel expenses. Federal data indicates that spending at gas stations surged by 21% in April compared to the same period last year, underscoring the financial strain on consumers.
Adding to the concern, oil industry executives are warning of potential further price hikes in the coming weeks. A top executive from ExxonMobil said at an investment conference on Thursday that prices could jump by an "order of magnitude" in a matter of weeks, as oil reserves reach "unheard-of inventory levels… really, really low levels," according to Oil & Gas Journal. Oil tankers have been blocked from passing through the Strait of Hormuz near Iran, a vital corridor for global fuel shipments. Over time, the higher gas prices will also lead to higher prices on store shelves, according to executives at both Walmart and Costco. Rising fuel costs are adding up for companies that transport a lot, including manufacturers and retailers. Furthermore, Costco's Millerchip said the cost of petroleum has driven up the cost of resin, which is likely to increase the price of items using plastic or polyester.
