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As gas prices rise, Costco has a secret weapon
The ongoing conflict in Iran and normal seasonal demand increases have caused gas prices to climb.”Spring Break season is here as the national average for a gallon of regular gasoline jumped nearly 35 cents since last week,” according to data from AAA. March 12 National Average: $3.59One Week Ago: $3.25One Month Ago: $2.94One Year Ago: $3.08 That’s an opportunity for Costco, which has used low gas prices as a way to entice people to join the warehouse club.”You save approximately 20 cents a gallon at Costco over other local vendors,” David Schwartz, who, together with his wife Susan, authored “The Joy of Costco,” told CNBC. “That’s something we have seen time and time again across the country.” Costco has a plan for rising gas pricesAs gasoline prices fall, Costco does not lower prices at the same pace it raises them when prices are climbing. This allows the company to recoup some of the profits lost by doing the reverse when prices were rising.In theory, that alleviates some of the pain at the pump for Costco members as prices rise.Former Costco CFO Richard Galanti defended that practice during the warehouse club’s gas business during its second-quarter earnings call.“I think part of that story has been thrown away because it seems that not only us, but the supermarket retailers and other discount retailers that operate large numbers of gas stations, they’ve been able to use it too. As prices went up or went, even went down a little bit, they didn’t go down as fast as perhaps they could have been, which gives us, in our view, an ability to make a little more and still be the most competitive,” he said.
Rising gas prices may drive more people to Costco’s gas stations. Shutterstock
Costco’s gas can be worth a membershipCostco sells its Gold membership for $60. If you assume $0.20 per gallon in gas savings, then the math on making joining the warehouse club worth it just for gas is simple.Every five gallons saves you $1, so 50 gallons is $10 in savings, and 300 gallons equals the price of your membership. As gas prices rise, Costco customers are also more willing to drive farther to visit the chain’s pumps. Former Costco CFO Richard Galanti shared more color on the chain’s gas pricing during its fourth-quarter-earnings call.“Everybody seems to be wanting to make more in gas, which allows us, in our view, to make a little more and still be even more profitable,” he said. “We’ve seen our competitive spread versus our direct competitors at every location, on average, improve over the last couple of years to now be in the — I want to say the $0.30 range per gallon. Thirty is the average, which is up. It’s an average, and it can range from 10 to 45.”Related: History of Costco: Company timeline and factsCostco also has a new gas strategyWhile it’s a new plan for the chain, Costco has added standalone gas stations to its portfolio. It has one in California and plans another location in Hawaii.”The Costco gas station is expected to have 20 fueling islands with 40 gas pumps, according to a report from local station KITV News. It is also about a mile from a traditional Costco Wholesale store that includes a Costco gas station,” Grocery Dive reported.GlobalData Managing Director Neil Saunders believes that Costco could add to its list of standalone gas stations.”Costco gas is wildly popular with members because of the cheaper prices. If successful, there are other locations where this could be implemented,” according to Arizona Republic.Gas is a massive driver for Costco.”The number of warehouses with gas stations varies significantly by country. “We operated 747 gas stations at the end of 2025. Our gasoline business represented approximately 10% of total net sales in 2025,” the chain shared in its annual report.Related: Popular coffee chain closing all locations after surprise sale
Trump signs 2 executive orders to improve home affordability
On Friday, President Trump signed two executive orders related to making housing more affordable for Americans. The first focuses on increasing home construction, and the second aims to help small banks extend mortgage loans.Since Trump began his second term, I have covered his ideas to improve home affordability, such as creating 50-year mortgages and portable mortgages. (The 50-year mortgage would make buying a home cheaper in the short term but much more expensive in the long run. Portable mortgages exist in the U.K. and Canada but would be difficult to implement in the U.S., to say the least.)Friday’s executive orders are Trump’s latest attempt to shift focus to his efforts on housing affordability before the midterm elections.One order focuses on revising environmental regulations to build homes fasterWhy does Trump focus on home construction in his first executive order? Because slow construction leads to less inventory, resulting in more demand than supply. When there are more buyers than homes for sale, houses can sell for more. Ideally, more new-construction homes would make houses less expensive.For years, new construction has struggled to keep up with homebuyer demand. According to a Zillow report released on Thursday, year-over-year single-family home constructions decreased by 6.5% in January. Speeding up new-home construction could benefit many buyers.Related: Iran war causes mortgage rate surgeThe executive order directs federal agencies to update a number of the regulations currently in place that slow down construction, specifically environmental regulations. “The Order directs the EPA Administrator and the Secretary of the Army to review and revise stormwater, wetlands, and other water-related permitting requirements to reduce building and ownership costs, streamline Federal regulatory approvals, and increase home insurability,” the White House stated in a fact sheet.The order instructs agencies to remove or change “overly burdensome” housing requirements related to water, energy, and alternative energy. It asks federal agencies to offer state and local governments incentives to make the construction permit process faster, one item on the list being to “curtail ‘green’ building codes.”The second order aims to help more community banks offer mortgagesTrump’s second executive order calls for the Consumer Financial Protection Bureau (CFPB) to alter its regulations so that more lenders — particularly smaller, community banks — can provide mortgages to its customers.“Community banks and smaller lenders have retreated from mortgage markets they once served, unable to absorb the compliance costs associated with making, servicing, or holding a mortgage made to community borrowers,” the White House wrote in a fact sheet.Among its list of demands, the order asks for streamlined regulations, alternative valuation models to make home appraisals faster and less expensive, and more digital tools to speed up the home-buying timeline.The White House claims that by making it easier for small banks to offer home loans, there will be less competition between lenders, mortgage rates would go down, and it would help low-to-moderate income borrowers, first-time home buyers, and those buying in rural areas qualify for mortgages.More on the housing market:The Iran war causes mortgage rates to surgeExisting-home sales exceed Goldman Sachs’ expectationsAARP quietly releases key guidance on mortgage rates, real estateConsidering the orders’ potential ramificationsI felt conflicted as I read through the executive orders’ fact sheets, because I care deeply about both affordable housing and the environment. It’s crucial to think about how these changes could play out in reality.Large chunks of these orders focus on cutting through red tape to speed up the housing construction and home-buying processes. However, cutting red tape also leaves more room for oversights and errors.By overturning environmental regulations, it’s possible homes will be built in areas that aren’t necessarily safe.If federal agencies update wetland, stormwater, and water-related permitting rules, will houses be built in areas that are more likely to flood?While alternative valuation models, such as desktop and hybrid appraisals, are faster and less expensive than traditional, in-person ones, they’re often less accurate. If an AVM results in a low appraisal, a homebuyer may not qualify for a mortgage large enough to buy the house.The White House wrote, “Over more than a decade, a wave of regulatory changes — driven largely by the Dodd-Frank Act and subsequent rulemaking — has dramatically increased the cost and complexity of accessing a mortgage.” The Dodd-Frank Act was enacted after the 2008 financial crisis to protect consumers from deceptive lending practices. Would becoming laxer about regulations make more homeowners more vulnerable to predatory lending?Related: Iran war causes mortgage rate surge