Ministers must be wondering when fuel prices will start to bite. They are about 25p a litre higher today than in 2000 when the petrol protests meant parts of the country ran dry, and Gordon Brown was forced to promise to freeze fuel duty for two years to stem public anger.

Tax on petrol is higher now than it was then, with a far higher basic price and new duty increases - another 2p last month, with a further 2p rise due in April. These have helped to send the price of unleaded fuel soaring to more than £1 a litre, two thirds of which is duty and VAT. When people are having to calibrate how many times they drive to the supermarket or carefully count the cost of the school run (I am thinking of rural areas here, not those driving children across town to private schools), it is surprising that public anger at the latest rises has so far been so subdued.

This is partly because the price of petrol is widely (mis)understood to be a global problem beyond the control of the Government: it's something to do with the Middle East, and India and China, and war in Iraq, and the fact that we all do too much driving these days, isn't it? Well, yes and no. Yes, all those things have a lot to do with the price of crude oil. No, none of them has as much to do with the price of petrol at the pump as tax does. Of the pound you pay for a litre, production and delivery costs are 31p, the retailer takes about 4p, duty is 50.4p and VAT nearly 15p. The basic price of crude just makes it worse.

The high basic price is partly down to global demand. But speculators gambling on rising prices have also been pushing up the price of oil, making the near-$100 barrel a bit of a goldrush for banks and the Treasury. The price of oil is where big money and the interests of small people really collide.

For if it's bad for drivers, it's far worse for millions of people in rural areas who also rely on oil to heat their homes. Around 3.5 million households in the UK use heating oil instead of gas, the vast majority of them kerosene. If you think petrol has shot up in price, take a look at the cost of kerosene. It has risen from 17p a litre in the winter of 2003 to 42-44p a litre now (there is no duty on it, which keeps the price lower than petrol). Over the same period the winter fuel payment of £200 - paid to those with plenty of money, or who repair to the Canaries for the winter, as well as those with none - has not increased at all.

An average three-bedroom home that would have cost £500 or so to heat (and provide hot water for) through the winter four years ago will cost perhaps £1,200 now, a completely unaffordable increase particularly for many elderly people and those with young children at home all day and least able to afford it.

These are the people that the bankers wallowing in their fat oil profits should have in mind. About 25,000 older people already die in winter because of cold-related illness in England and Wales, a statistical blip known as “excess winter mortality” by the Office for National Statistics. Just how much worse the 40 per cent increase in the cost of oil this year will make that, in those homes running on kerosene (and many cook with it as well), God only knows. But round where I live, it is one of the main topics of conversation, with some families refusing to turn their heating on before December, and nobody daring to run it all day long.

Help the Aged launched a survey yesterday revealing that more than 2.5 million older people live or stay in one heated room in winter to keep warm and save on heating costs. Almost two million wear outdoor clothes indoors, a million huddle in libraries and shopping centres, more than one and a half million stay in bed under the blankets. It is a disgusting way to treat the elderly.

Given the extra money rolling into the Treasury from rising fuel duty on rising oil prices, couldn't some of it be directed towards those most in need of help with fuel bills this winter? Analysts argue that the increasing price of oil will have an environmental benefit, in making us all choose more fuel-efficient cars and homes in the medium term. But in the short term it is the elderly in particular who are most likely to live in poorly insulated old houses with ill-fitting windows and older, less-efficient heating systems. The speculators are not just playing with dollar signs on a balance sheet; they are playing with lives.

The story isn't going to end this winter, either. The International Energy Agency (IEA) thinks demand will rise by an average of 2.2 million barrels a day next year, compared with the 1.5 million-barrel rise in 2007, and unless the West cuts its own consumption the price of oil will continue to soar, hitting as much as $159 a barrel by 2030. You can see why the speculators are betting on it. The rate of increase in India and China is astonishing. In 2005 China consumed 6.6 million barrels of oil a day, second only to the US. By 2030, that figure will grow to 16.5 million barrels a day. By 2012, according to the IEA, we could be looking at a “supply crunch”. Sounds painful.

The pain will come early this year for people on modest incomes reliant on oil for basic heating and cooking. They will have to shiver through it. Some will die. When domestic heating prices soar in the US, people demand intervention from the Government. In the UK, we appear to think the government cannot do anything any more, and we don't even ask. I wonder whether the Prime Minister should find that even more alarming than he did the petrol protests.

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