Fredericton drivers are benefiting from a gas price war that has erupted in the city, pushing pump prices well below the regulated maximum levels.

The opening of a new Costco gas bar in the city has led to regular unleaded gasoline being sold for as low as 116.9 cents per litre, which is 13 cents cheaper than the maximum level set by the Energy and Utilities Board.

Prices started coming down about a week and a half ago and took another big price drop this weekend.

George Youssef, the owner of a Fredericton cab company, said the cheaper gas prices save him a lot of money when he fills up his fleet of more than 30 vehicles.

"It's a pleasant surprise to wake up in the morning and see nine to 10 cents coming off this weekend. It means a lot to us, as far as the taxi business is concerned, because our biggest expense is gas," Youssef said.

"I'm hoping the rest of the province sees the same. It's nice to have Costco around to be able to start this war."

One gas station manager said he's now losing about 4.5 cents on every litre of gas that he sells.

Established gas retailers say they hope their customers will realize that their old gas station is more convenient, that it doesn't have lineups or membership fees and that it's not such a bargain to burn up more fuel by driving across town for cheap gas.

The Energy and Utilities Board sets the weekly maximum price for petroleum products on Thursdays. The current price is 129.9 cents per litre for regular unleaded gasoline.

Gas stations are always permitted to sell gasoline for less than the maximum price.