The opening of Costco’s Auckland petrol station is expected to ramp up competition in the city’s northwest.

Work on the 27-pump self-service petrol station is nearing completion and the site will open ahead of the three-level Costco mega store at Westgate, the NZ Herald reported on Monday.

However, an official opening date is yet to be revealed.

As global fuel prices soar, consumers in the United States have flocked to wholesale clubs like Costco, where petrol can be as much as 30 cents a gallon (3.7 litres) cheaper than at traditional service stations.

AA motoring policy adviser Terry Collins​ said Costco’s presence was likely to influence petrol prices at nearby sites.

“The more competing outlets, the lower the price. That is a good rule of thumb,” he said.

But with Costco fuel available only to members, those keen to cash in on any discounts at its Auckland site will first need to stump up with the annual membership fee of $60 for individuals and $55 for businesses.

Membership fees are one of Costco’s key sources of revenue, allowing it to run on thin profit margins and pass savings on to customers.

Fuel, on the other hand, makes up about 10 per cent – US$20 billion (NZ$29 billion) – of Costco’s annual sales.

While a notoriously low-margin business, retailers charging significantly less than independent service stations could still make money from fuel if they moved enough of it, Tom Kloza​, global head of energy analysis at IHS Markit’s Oil Price Information Service, told CNN Business.

It was not unusual for Costco locations in the US to sell as much as 1 million gallons (4.5 million litres) a month compared with 80,000 gallons at other service stations, he said.

Extracted in full from: Cut-price fuel on the cards as Costco prepares to open Auckland petrol station | Stuff.co.nz

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