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Costco announced plans to build its first standalone gas station. The first one will be in Mission Viejo, California. The station will have 40 pumps, which will make it Costco's largest gas station to date. Construction is expected to start this fall with the station opening next spring.
California is forcing 473 mom and pop gas stations to shut down right now because they cannot afford $2 million tank upgrades. At the same time, when Costco tried to build a mega gas station with 32 pumps, a judge blocked the plan after neighbors complained about traffic. Fresno, California. Costco wanted to build a 219,000 ft warehouse with 32 gas pumps. Most stations have maybe eight or 12 pumps. Costco sells gas 50s to $1 cheaper than everyone else. They lose money on every gallon just to get people in the door buying bulk toilet paper and rotisserie chickens. The project would have brought $15 million a year in tax revenue every year. $15 million. Property values would jump from $1 million to $98 million. The school district would get $200,000 in bond money. Construction would pump $150 million into the local economy. We are talking thousands of construction jobs, hundreds of permanent jobs. But the Hearnden Riverside Coalition, SUEED, they complained about traffic and environmental concerns. They spent 2 years fighting this in court. Judge Jonathan Skyles blocked it in July 2025. Costco's lease expired in September. They had been there since 1985, 40 years serving Fresno. Now they might leave entirely. Madera County next door is begging them to come build there instead. They want those tax dollars, those jobs.
Meanwhile, January 1st was the deadline for California's underground tank law, Senate Bill 445. 473 gas stations had to replace their singlewalled tanks with doublewalled tanks or close forever. $2 million per station. These momand pop operations, many run by immigrant families for decades, cannot afford it. Think about what $2 million means to a small business. These stations might make $50,000 profit in a good year. How do you pay back a $2 million loan when you are making $50,000 a year? You do not. The state promised help through the Rust program. Station owners applied and waited 2 years just to get an answer. 2 years. By the time they were rejected or approved, it was too late. Contractors were booked solid because everyone was trying to beat the same deadline. Permits took another year, environmental studies, soil samples. Now they are getting redtagged and forced to shut down. Rural communities are losing their only gas station for miles. Some small towns, the gas station is everything, the only grocery store, the only ATM, the gathering place. Fire departments cannot fuel trucks. They are driving 20 m to the next town before responding to emergencies. School buses are scrambling for diesel. Some districts are talking about shortening routes because they cannot guarantee fuel availability. Ambulances are planning routes based on refuel locations, not on where patients need them.
Philip 66 just closed their Los Angeles refinery. New Year's Eve done after 106 years of operation. That's 139,000 barrels a day gone. 8% of California's refining capacity vanished overnight. 600 jobs lost. families without paychecks. The site is an environmental disaster. There is a lake of hydrocarbons underground, 13 ft thick in some places, decades of contamination, lead, benzene, FAS chemicals that never break down. The cleanup could cost $200 million. Philip 66 might just walk away. There is no law forcing them to clean it up. Valero is closing its Benia refinery in April. Another 145,000 barrels are gone. They have been there 25 years. They spent $1 billion preparing to exit California. Not 1 billion to upgrade or modernize, 1 billion to leave. That is how bad the business environment has become. Combined, that is nearly 20% of California's refining capacity disappearing in 4 months. California uses 13 million gallons of gasoline every single day. Where is that fuel coming from now? California had over 40 refineries in 1991. After these closures, six to eight remain. Three companies, Marathon, Chevron, and PBF Energy, will control 90% of what is left. They can charge whatever they want. There is no competition. Gas prices right now are $4.29 per gallon in California versus $2.26 per gallon in Oklahoma. California drivers pay $2 more per gallon. For a 15gallon tank, that is $30 extra dollar every fill up. Fill up once a week. That is over $1,500 a year in extra gas costs. UC Davis economists say $548 per gallon by August when both refineries are offline. USC professor Michael Mishe predicts prices between $7.35 and $843 per gallon by the end of 2026. That is a 75% increase. Some experts warn of $12 per gallon in extreme scenarios such as a refinery fire, a port strike, or any supply disruption. Think about what $8 per gallon means. A nurse pays $120 to fill her tank. A plumber spends $300 a week on fuel and passes that on to customers. Food delivery drivers cannot make money. Uber becomes a luxury service. Every product that moves by truck costs more. Your Amazon packages, your groceries, everything.
The military is panicking. California has 30 plus military bases that need fuel, including Travis Air Force Base, Camp Pendleton, and Edwards Air Force Base. Assemblyman Stan Ellis says they have only a three-day fuel supply without local refineries. Three days after that, fighter jets are grounded, training stops, and replacement fuel is a distant option. Replacement fuel comes from India, which gets 40% of its oil from Russia. That means American military bases are depending on Russian oil. Great national security plan. California has zero pipeline connections to other states. Not one pipeline brings fuel from Texas or anywhere else. Every drop of imported fuel arrives by ship, taking three to six weeks from Asia. Those tankers burn the dirtiest fuel imaginable while crossing the Pacific. One tanker trip is the equivalent of thousands of cars running for a year. If there is trouble in the Taiwan Strait, if China flexes, those tankers stop coming. California has maybe 2 weeks of reserves. Then empty pumps.
Costco's 32 pumps could have served 5,000 cars daily. That is 150,000 gallons at below market prices. Costco buys fuel in massive bulk, gets huge discounts, and sells at zero profit margin. During a supply crisis, that capacity could have stabilized the entire local market. When other stations run dry, Costco's supply chain keeps pumping. But the neighbors worried about traffic on H. Hearnden Avenue. The environmental group claimed the city violated California's Environmental Quality Act. They said greenhouse gas emissions were not properly calculated. The city's environmental report was 400 pages and it took 4 years to complete. The judge said it was not good enough because it relied on an invalid climate plan. Here is the irony. forcing people to drive 20 miles to find gas creates way more emissions than a Costco parking lot ever would. Every closed station means longer drives to fuel up. More idling in lines at the few remaining stations. More congestion. The environmental impact is worse, not better. These 473 closing stations are not being replaced with electric charging stations. Nobody is building anything new. They are becoming vacant lots, maybe apartments. family businesses built over generations gone. The Korean family that ran the Shell for 30 years. The Mexican couple who owned the Arco by the high school. The Indian family with three stations passed from grandfather to father to son. All forced to walk away because they could not navigate the bureaucracy in time. Valero spent $1.1 billion just to exit California, just to leave. That is how toxic the business environment has become. The Philips 66 site has lead contaminated sludge buried from the 1940s. PFAS, forever chemicals, are spreading toward residential areas. Benzene, a known carcinogen, is in the groundwater. They submitted a vague cleanup plan with no timeline and no guaranteed funding. They might walk away, leaving taxpayers with the bill.
The same week the judge blocked Costco, gas hit $4.85 in Fresno. Some stations were already over $5. The station near where Costco would have built charges $529 for regular. The Costco 30 miles away in Clovis was $4.39, nearly a dollar cheaper. So Fresno residents drive to Clovis, burning 3 gall round trip to save money on gas, creating more traffic, more emissions. Exactly what the coalition claimed to prevent. The California Fuels and Convenience Alliance warned this would happen. They begged the legislature for help. They said rural areas would become fuel deserts. They predicted price spikes. The legislature ignored them. Now it is happening exactly as predicted.
Every closure makes the remaining refineries more powerful. They know no competition is coming. No new refineries will ever be built in California. The permitting alone would take a decade. The environmental lawsuits would never end. The costs would be astronomical. This is an energy death spiral. Regulations force closures. Closures reduce supply. Reduced supply raises prices. High prices force more closures. Eventually, California becomes completely dependent on imports. Then you are at the mercy of global markets, foreign governments, and shipping companies that know you have no choice. The Costco project would have generated $55 million in economic benefit annually, according to city documents. Jobs, taxes, savings for consumers, multiplier effects throughout the economy, all gone because a few dozen residents did not want traffic on their street. California is simultaneously experiencing a fuel crisis and preventing anyone from addressing it. Small stations are forced to close. Big companies are blocked from opening. Refineries are fleeing the state and everyone wonders why gas costs twice as much as the rest of America. When you are sitting in a mileong line paying $8 a gallon, remember this moment. We could have had 32 more pumps in Fresno and 473 more stations statewide. But regulations and lawsuits killed them all. The infrastructure is gone. The refineries are closed. The stations are shuttered. They are not coming back. Nobody is investing billions to enter a market California is actively destroying. $12 gas is not crazy anymore. It is coming and there is nothing anyone can do to stop it.