OH, no, here we go again. That's what motorists will be thinking when they see the price of unleaded nudging towards £1 a litre.

First we had council tax. Then gas prices. Now the cost of fuel is going through the roof.

That £1 figure is frightening enough. Think of it in good old imperial measures, and it is even more shocking. Almost £5 a gallon.

There are several reasons for the latest fuel price rise. Oil production has been affected by the political situation in Nigeria. And prices have never fully recovered from the effects of Hurricane Katrina last September.

The main reason, however, is mounting fears of a military attack by the US on Iran, the world's fourth largest oil exporter.

If you have ever thought that politics doesn't matter to you, think again. This is politics hitting you right where it hurts - in your pocket.

So what should we do? The usual advice is don't panic buy, although it is largely the stock market panicking over Iran that is responsible for driving up oil prices. Maybe we are the ones who should be telling politicians and the stock market not to panic.

One person who won't lose out is the Chancellor. True, the basic rate of fuel duty is a flat rate of 47.1p per litre and that will not have increased. But the Chancellor also charges VAT on fuel and as the price of fuel goes up, so do his VAT takings.

A rise in the basic rate of fuel duty is on the cards this September. The Chancellor should consider postponing that - at least until world oil prices stabilise.

Updated: 10:16 Wednesday, April 19, 2006