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In the hunt for cheaper gas, people are going out of their way for discounted fuel at Costco and Walmart — many of them visiting for the first time. Drivers also are now filling up more often, but topping up with fewer gallons at a time.
As the U.S. war in Iran continues to drive up gas prices, Costco's gas stations have been selling record amounts of fuel, executives told investors on a call Thursday. 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. People have been willing to drive further and wait in line longer to buy cheaper gas.
"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.
At Walmart's gas stations, in recent weeks, people have begun to fill up with fewer than ten gallons at a time, for the first time since 2022.
"That's an indication of stress," Chief Financial Officer John David Rainey told investors last week.
"We see with our customers that the high-income customer is spending with confidence," Rainey added later, "while the lower-income consumer is more budget-conscious and perhaps navigating financial distress."
Similarly, 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 U.S. price of regular gas on Thursday was $4.39 per gallon, according to AAA. That's up $1.22 from a year ago. This has Americans devoting a greater share of their paycheck to gas. The latest federal data shows that spending at gas stations in April surged a whopping 21% compared to last year.
A growing chorus is warning of even higher prices to come — potentially within weeks — as global oil supplies are depleting. Oil tankers have been blocked from passing through the Strait of Hormuz near Iran, a vital corridor for global fuel shipments.
At an investment conference on Thursday, a top ExxonMobil executive said 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.
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. Plus, the Strait of Hormuz is also a critical route for shipments of fertilizer needed to grow food. And 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.
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