Costco opened its first standalone gas station in Mission Viejo, California, on June 24, 2026, offering fuel at $4.59 per gallon—71 cents below Orange County’s average—amid a state gas tax hike. The 40-pump site, accessible only to members, threatens nearby retailers like Circle K and Shell.
Costco’s debut of its first standalone gas station in Mission Viejo, California, marks a strategic shift in the retailer’s approach to fuel sales, with the site’s $4.59-per-gallon price tag sparking immediate concerns among local competitors. The 17,185-square-foot facility, which opened on June 24, 2026, features 40 fueling positions and operates as a member-only outpost, according to city planning documents viewed by C-Store Dive. While the station lacks a warehouse or convenience store, its aggressive pricing—71 cents below the Orange County average, per C-Store Dive—has already drawn scrutiny from nearby retailers like Circle K, ExtraMile, United Pacific, BP, and Shell.
Pricing Strategy Sparks Retailer Concerns
The Mission Viejo station’s $4.59 price for regular gasoline, which is roughly 70 cents cheaper than Orange County’s $5.30 average, has positioned Costco as a direct competitor to smaller fuel retailers. C-Store Dive reports that the station’s pricing could divert traffic from nearby convenience stores, which lack the scale to match Costco’s wholesale fuel margins.
The impact is not just theoretical. Gary Millerchip, Executive Vice President and Chief Financial Officer, said during the company’s May earnings call, as reported by C-Store Dive: “We’re seeing some members that have been members for some time but are using the gas stations for the first time — we think that’s also an encouraging sign for long-term loyalty.” However, the station’s lack of a warehouse or retail store means it cannot leverage Costco’s broader membership ecosystem to drive additional sales.
California’s Gas Tax Hike Adds Pressure
The station’s opening coincided with a 2.2-cent-per-gallon increase in California’s state gas tax, effective July 1, 2026, as part of the 2017 Road Repair and Accountability Act. Drivers now face an excise tax of 63.4 cents per gallon, the highest in the U.S. This hike, which adds about 33 cents to a 15-gallon tank, has intensified scrutiny on fuel retailers already grappling with inflation.
Costco’s pricing strategy appears to capitalize on this context. While the company did not comment on the Mission Viejo site, its broader fuel business has become a key driver of customer loyalty. During the third-quarter earnings call, President and CEO Ron Vachris highlighted that the final five weeks of the quarter were the company’s highest-volume fuel weeks ever, C-Store Dive reported. The new station, located at 25732 El Paseo, operates from 5:30 a.m. to 10 p.m. on weekdays, 6 a.m. to 8:30 p.m. on Saturdays, and 6 a.m. to 7:30 p.m. on Sundays, according to Secret Los Angeles, making it a convenient option for commuters and shoppers in the area.
What’s Next for Costco’s Fuel Expansion?
While Costco has not outlined a clear plan for expanding its standalone gas stations, the Mission Viejo location is the first of two in development, C-Store Dive reports. The company’s focus on fuel sales aligns with broader trends in retail, where grocers and big-box stores increasingly integrate fueling as a customer retention tool. However, the lack of a warehouse or convenience store at the Mission Viejo site raises questions about its long-term sustainability.
For nearby retailers, the challenge is clear. The new Costco station could divert traffic from existing locations, especially if members prioritize fuel savings over convenience. As the July 1 tax hike takes effect, the pressure on smaller retailers to compete with Costco’s pricing will only intensify.
For Costco, the mission is twofold: deepen member loyalty through fuel savings and test the viability of standalone stations as a scalable model. Whether this experiment will expand beyond Mission Viejo remains to be seen, but the company’s emphasis on fuel as a “long-term loyalty driver” suggests it is far from a one-off move.
Find more reporting in our Business section.
Keep reading
