Tomorrow, Costco opens its doors in Iceland and already the American wholesale giant is causing a ruckus in the Icelandic retail market, with its gas prices shaking up the competition.
Cleverly Costco set the prices on their gas pumps at 169.5 krónas, which would make it by far the cheapest in Iceland. Gas prices have not gone below 170 krónas since 2007, with most companies charging upwards of 200 krónas per litre.
Even before the wholesaler opens its pumps, it has started to impact prices as the cheapest competitor Orkan, has lowered its prices by two krónas since news broke about Costco’s affordability, from 187 to 185 krónas.
Jón Kristján Sigurðsson, the editor of The Icelandic Automobile Association magazine, told RÚV that the discounted prices at Costco show that a de facto oligopoly has existed in the gas market for years.
“I think we can easily claim that their entrance into the market will create ripples in the market,” Jón said. “We should not at all be surprised if the gas companies lower their prices. They will at least have to take the situation seriously.”
We at the Grapevine are big supporters of competition, as we believe it makes everything better. Which is why we make the interns compete in boccia every Friday for the right to come in late on Monday.