Planned Costco gas station in Sudbury could lead to lower gas prices, says analyst

Costco Wholesale Canada has confirmed it plans to open a new 24-pump gas station in Greater Sudbury in summer 2022.

In an email to CBC News, the retailer said it expects to start construction in the spring, and it should be ready for customers in the summer. The company did not confirm the planned location for the gas station.

Patrick De Haan, the head of petroleum analysis with GasBuddy, said the new gas station will likely result in lower gas prices in the area.

"I can't think of a situation where Costco coming into an area did not have a great influence on gas prices," he said.

Due to economies of scale, De Haan said Costco tends to charge five to 15 cents a litre less than its competitors when it enters a new market.

"In almost every single case, opening a Costco station brings lower gas prices to the immediate area," De Haan said.

He added that when Costco enters a market, nearby gas stations tend to lower their prices as well to compete. But competitors often can't quite match Costco's prices, he said.

A Costco membership is required to gas up at their locations, and those range from $60 a year for their base membership, to $120 a year for the executive membership.

De Haan said he could not recall competitor gas stations going out of business because Costco entered a local market. 

"Generally those stations appeal to people that may not have Costco memberships," he said. 

"Stations that are near Costco will have lower prices, and that will inherently bring people there because stations that are maybe outside of that area are charging an even higher price."