Published on Thursday, July 10 2025
Authors : Tom Kloza Chief Market Analyst

When first half 2025 retrospectives are rendered for dynamic action in the global energy markets, Middle Eastern violence will no doubt be ranked as the most disruptive force in crude and refined products.

But while nearly all eyes in energy were focused on the Persian Gulf and the vital Strait of Hormuz, a future initiative by Costco was quietly disclosed. That secretive test project could indeed provoke the most tectonic shifts in fuel distribution and sales in a generation.

Costco has commenced permitting to build a standalone mega-station with 40 fuel pumps in Mission Viejo, California. Patrons won’t have an adjacent warehouse to shop in, but the retail offering will no doubt feature Costco’s Kirkland gasoline at prices that are typically 30cts/gal below average competition. A massive 17,000 square foot canopy will cover the fueling stations and the property will be able to process an incredible 9500 vehicles per day.

Veteran fuel marketers talked to by Turner, Mason & Company were effusive in their praise of the move. Mission Viejo may house some of the most expensive real estate values in the country, but one multistate marketer predicted Costco might get its money back on the land investment in less than two years.

A pro forma provided by another fuel marketer spoke to the incredibly lucrative returns likely for the new site which is scheduled to open in spring 2026.

The projected numbers are staggering, particularly if the site features the bumper-to-bumper vehicle traffic that is characteristic of most Costco warehouse clubs.  Big Box clubs have long sought “killer categories” and the standalone station may well kill the gasoline category off-site and even motivate competitors to experiment with similar standalone offers.  

VISION OF THE FUTURE FOR NORTH AMERICAN RETAILING? A STATION PRO FORMA FOR THE AGES

COSTCO – Mission Viejo, CA (Spring 2026 Opening)
Transactions/hour per Fueling Position		7
Gallons per Transaction		11
Number of Fueling Positions		40
Gallons/hr.		3,080
Hours of Operations per Day		18
Gallons per Day of Sale		55440
Days per Week		7
Gallons/Week		388,080
Gallons/Year		2,018,0160
Gross Annual Fuel Profit at 30cts/gal		$6,054,048
Gross Annual Fuel Profit at 35cts/gal		$7,063,056
Gross Annual Fuel Profit at 40cts/gal		$8,072,064
Source: Competitive multistate retailer

 

Note: Early in second half of 2025, the average rack-to-retail margin for regular gas in Southern California was 86cts/gal, according to OPIS. Considerably higher margins are available for premium gas so high-octane margins of over $1/gal might represent a further bonus for the rollout in the well-heeled Mission Viejo community.

Success at the Mission Viejo Costco in 2026 could spark a building boom for the Big Box retailer elsewhere. One can quibble about precise metrics, but opening dozens of fuel-only sites might boost companywide fuel category proceeds by well over $100-million. Western states probably represent the lowest hanging fruit, but Costco could pursue similar opportunities in Canada and other countries.

Market watchers believe that the move to standalone fuel sites could spark a shift in building plans not just for Costco, but for the fuel offerings of BJ’s and Sam’s Clubs and perhaps even a supermarket chain or two. BJ’s and Sam’s Club could fill in the “white space” between warehouse clubs with sites that just sell fuel and limited convenience items.

BJ’s has at least one standalone fueling site in New England thanks to a purchase of a Shell station made years ago. It is not, however, a “superpumper” but more of a traditional site that might pump 100,000 gal/month or so. Kroger has rolled out the occasional standalone site in Texas and other markets, but only where parking lots for grocery stores limited construction.

There is plenty of “white space” amidst the 625 Costco warehouses that dot the United States. Rolling out a standalone site in Southern California raises eyebrows because of the uncertainty related to Golden State supply. The upcoming closure of a Phillips 66 refinery near Los Angeles and the spring 2026 shutdown of the Valero plant in the Bay Area may lead to questionable supply concerns in the remainder of the decade.

“If they can make it work in Southern California, they (Costco) can make it work virtually anywhere,” one California gasoline marketer told Turner, Mason & Company, adding that the lofty Golden State margins and high number of club members combine for a compelling retail proposition. Tightening supply in California isn’t a major deterrent since refiners embrace creditworthy Costco as a preferred customer.

The potential success of the Costco roll-out might motivate other changes as well. Walmart, for example, has forged a strong relationship with ExxonMobil. The membership program known as Walmart+ has long championed gasoline savings, with U.S. customers receiving 10cts/gal discounts at branded Exxon and Mobil stations throughout the country. Those 10cts/gal discounts, however, look expensive when branded retail offerings are compared to the aggressive off-price offerings of warehouse clubs.

Beyond the warehouse clubs, the allure of “going big” has never been greater.

Once just a phenomenon in Texas, Buc-ee’s has been tremendously successful in debuting stores with as many as 120 pumps and 75,000 square feet of travel center space. Buc-ee’s now boasts well over 60 sites, with stores in Alabama, Colorado, Florida, Georgia, Kentucky, Mississippi, Missouri, South Carolina, Tennessee, and Virginia as well as 36 travel centers in Texas.

We welcome the opportunity to connect and discuss how Turner, Mason & Company can support your strategic objectives in this rapidly changing environment. For companies in the retail fuels space, or refiners who may be considering investing downstream of their operations, we can assist with:  

•		Navigating fuel mix transitions and long-term supply and demand outlooks,
•		Adapting to evolving federal and state energy policies,
•		Assessing regional penetration of electric vehicles,
•		Providing independent valuation of wholesale and retail marketing assets.