Could the Sudden Jump In Gas Prices Hurt Costco's Stock? Here's How Supply Chain Issues Could Affect the Retailer in 2026.

Rising gas prices have a widespread impact on the economy. Of course, consumers feel the pinch every time they go to the pump, but it raises prices in myriad other ways. Other fuel costs go up, including for heating oil and propane. Natural gas prices have soared as well, meaning electricity costs are up.

Consumers also see higher prices elsewhere, including for transportation, as fuel is a major input for airlines, trucking, and shipping, which means that retail prices go up as shippers typically need to pay a fuel surcharge in this kind of environment.

One of the retailers most affected by rising prices is Costco Wholesale (NASDAQ: COST), one of the largest retailers in the country.

Costco benefits from a differentiated business model as it makes most of its profit from its membership fee and sells goods at near cost. It also private-labels much of what it sells under the Kirkland brand. Brand names agree to let Costco private-label their products because they can move a lot of product at Costco, even though it typically comes at lower margins. Costco's bulk-selling model also helps it keep prices down, incentivizing customer visits.

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How higher gas prices affect Costco

Costco is also differentiated as a retailer because it sells gasoline as a way of drawing customers to its stores.

In fact, high gas prices tend to be good for Costco because shoppers are more likely to get gas there to take advantage of the discount when gas prices are up.

That can also drive traffic to Costco's stores, benefiting the retailer in two ways. Similarly, consumers are more likely to visit Costco when prices are up since they count on the retailer for the lowest prices.

If you're curious how higher gas prices and inflation might affect Costco, 2022 offers a good analog. Back then, gas prices spiked after Russia invaded Ukraine, and prices rose due to supply chain constraints caused by the end of the pandemic.

However, Costco shone in that era. In the quarter ended Aug. 28, 2022, it reported comparable sales up 10.4%, adjusted for fuel prices, and 10.6% growth for the year ended that date, even as Costco had delivered strong results during the pandemic.

The current situation isn't exactly the same. Consumers in 2022 were still flush with cash from pandemic-era stimulus, but Costco appears to be in better shape than most of its peers to endure an extended period of high gas prices.

Once again, Costco's business model is ready to meet the moment.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.