Walmart and three retailers most at risk from rising gasoline prices

The global energy landscape is fracturing as the US-Iran war escalates, sending crude oil prices on a vertical trajectory.

After beginning this year near $60, West Texas Intermediate (WTI) and Brent crude briefly flirted with a high of $120 – levels not seen in four years – before settling in the triple digits.

And this “oil choke point” is no longer a theoretical risk; it’s a direct tax on the American consumer.

As gasoline prices surge, analysts warn that retailers tethered to lower-income demographics – like Walmart Inc and Dollar General – face a looming contraction in discretionary spending.

Walmart stock: the struggle of the staple giant

Walmart shares sit in a precarious position as energy costs climb.

With an average shopper income of about $66,000, the retail giant serves a demographic that feels the immediate sting of every cent added to the gallon.

While WMT’s robust grocery division often provides a “safe haven” during downturns, rising fuel costs act as a double-edged sword.

Not only do they increase the cost of goods sold through logistics and supply chain friction, but they also drain the “extra” cash customers usually spend on higher-margin electronics or home goods.

If gasoline prices remain elevated, even the world’s largest retailer could see a significant cooling in general merchandise categories.

Dollar General: these margins and tightened purses

Dollar General stock is perhaps the most sensitive to the current energy shock, catering to an average household income of about $60,000, the lowest among major peers.

For these shoppers, the choice between a “full tank of gas” and a “full cart of household essentials” is a weekly reality.

According to Spencer Hanus, a Wolfe Research analyst, for every $1 pop in oil, consumer spending typically sees a 70 bps decline. For DG shares, which have already seen over 5% decline in a week, the “squeeze” is literal.

The retailer’s reliance on frequent, small-trip shoppers makes it uniquely vulnerable when the cost of driving to the store becomes a financial hurdle.

Beyond the aisles: auto parts retailers hit the brakes

The pressure of skyrocketing fuel costs isn’t confined to general merchandise retailers; it’s rapidly spilling over into the automotive aftermarket.

Industry staples like Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY), whose average customers earn roughly $67,000 annually, are facing a paradoxical headwind.

While one might expect older vehicles to require “more maintenance” during economic strain, the sheer velocity of the current oil surge often forces these drivers to defer non-essential repairs.

As Brent sustains triple digits, “discretionary” car care – like performance upgrades or cosmetic fixes – is the first to be cut from the budget.

With AAP and ORLY shares already seeing significant weekly retreats, the sector is bracing for a “break-fix only” cycle, where consumers only visit the store when a repair is no longer optional.