The big American company's aggressive approach could see petrol prices dip under the $1 a litre mark for the first time since 2008.
Costco's philosophy is simple and successful: bigger is better.
Planning its Australian expansion, it was only a matter of time before the retail giant set its sights on a slice of the $38 billion fuel market, largely controlled by Coles and Woolworths.More stories from Today Tonight
Motoring expert John Cadogen believes competition is exactly what the fuel industry needs.
"Costco identified a niche in the Australian market because Coles and Woolies are working together to maximise their profit. They're not fighting each other to drive prices down," Cadogen said.
In the US Costco sells fuel below the market rate, but while they may lose money at service stations, this strategy has helped drive traffic to stores.
Now it wants to repeat that strategy here, and that means cheaper petrol than the supermarkets offer. The question is, just how love is it prepared to go?
"This could be the first time in years you'll see petrol below $1 a litre," Cadogan said.
Costco has reportedly committed $140 million to rolling out three new stores in Melbourne, Sydney and a potential site in Brisbane.
The cheap petrol will only be available to members who pay their $60 a year membership.
In America 61 million people are Costco members, and last year they spent $10 billion on fuel. Costco accounts for 7.5 per cent of the US market, and growing.
"Costco is just like an ATM for petrol. So you turn up at the machine, you swipe your card, you get your fuel, and there are no other human beings involved," Cadogan explained.
The supermarkets currently command a 47 per cent share of the petrol market, while independent service stations have dropped to seventeen per cent.
Phil Mason from Brisbane's Matilda Service station says independents are being squeezed out of the market.
"As far as independents view, it's another knock on the door for us," Mason said.
"It all has a bearing on us and to keep going the way it is, who knows what next year is going to bring."
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