Rising gas prices are driving more people to Costco for cheaper fuel. But the real benefit for retailers is the additional sales generated by the associated increase in in-store traffic. The national average for a gallon of regular unleaded gasoline was $3.91, according to AAA on Friday, as the Iran war enters its fourth week and U.S. crude oil prices soar to their highest levels not seen in four years. Gasoline prices have jumped about $1 a gallon over the past month, although it’s still well below the all-time high of $5.02 set in April 2022. Gasoline prices vary widely by state, with New York’s prices about 13 cents lower than the national average and California’s about $1.75 higher. “Historically, when you see price increases, it’s simply good for Costco,” Jeff Marks, director of portfolio analysis at Investing Club, said during Friday morning’s meeting. “People are going to go maybe a mile or two further and look inside while they’re at the gas station to get a lower price.” In its most recent earnings call on March 5, Chief Financial Officer Gary Millerchip predicted that Costco would benefit from higher oil prices. “When gas prices start to go up, our value proposition tends to resonate with our members because obviously we want to be the authority on gas pricing.” Gordon Haskett said Costco typically offers gas prices 9 cents off per gallon compared to its top five local competitors and 24 cents off the state average. Those savings become even more meaningful when fuel costs rise, as inflation-weary consumers start looking for bargains wherever they can find them. Visits to Costco gas stations “declined precipitously” in the week ending March 7, and continued to accelerate as prices rose, according to Gordon Haskett’s analysis of weekly and monthly traffic trends. In a note to customers on Friday, analysts said that “cross-hops from fuel customers into warehouses remain at 50%,” meaning half of gasoline customers also travel inside Costco stores. Therefore, if the number of refueling increases, the number of customers in the store will also increase. In a separate note Friday, JPMorgan also said Costco is benefiting from higher gas prices. “Higher gas prices tend to encourage club trips,” the analysts wrote. The recent spike in oil prices, and subsequently gas prices, is due to large-scale supply disruptions due to conflicts in the Middle East, which effectively closed the Strait of Hormuz, a key oil shipping route just off Iran’s coastline. @LCO.1 @CL.1 Year-to-date Mountain Brent vs. WTI Year-to-date International oil benchmark Brent crude rose 2% on Friday and is up about 10% week-to-date. West Texas Intermediate crude, the U.S. oil standard, also rose 2% on Friday, but was relatively flat for the week. Both Brent and WTI briefly exceeded $119 on March 9th. Since the US and Israel attacked Iran on February 28, Brent has risen about 50% and WTI has surged 45%. Certainly, rising oil prices in the short term will put financial pressure on consumers who are scrutinizing unavoidable expenses like gasoline and looking for bargains at Costco. They also refrain from shopping for non-essential items, rely on value-oriented shopping (like Costco), and reduce overall spending. Given that two-thirds of U.S. gross domestic product (GDP) growth comes from consumer spending, these dynamics could have a negative impact on the economy if the conflict drags on. If gasoline prices continue to rise for a long time, there is a possibility that inflation will reignite, which is a cause for concern. For these reasons, the Fed is likely to keep interest rates on hold at this week’s policy meeting, making further rate cuts this year difficult. Slower economic growth and a rising inflation environment will make things even tougher for all retailers, but Costco tends to do well even in tough times because it strives to keep prices as stable as possible. Conclusion Looking at Costco’s stock chart, Jim Cramer said Friday, “I think this is a breakout.” The membership retailer’s stock has fallen more than 1% over the past month, but Jim said the stock is poised to rise. The stock is up 13% year-to-date, outpacing the S&P 500, which is down about 5% in 2026 as of Friday afternoon trading. COST .SPX YTD Mountain Costco vs. S&P 500 YTD “I think Costco is the winner,” Jim added. Back in mid-December, we cut our Costco position in half to protect our profits after a significant decline. This sale (approximately $850 per share) represented a 200% gain on the shares purchased in early 2020. The company has secured enough funds to prepare for a recovery in stock prices, and the recovery has already begun. Since that transaction, the stock price has increased 15%. We give the stock a hold rating of 2 and a price target of $1,100, representing a 13% upside from Thursday’s closing price. (Jim Cramer’s Charitable Trust is long cost. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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