The green of the olive oil is shocking: like Night Nurse. Or Swarfega. You wouldn't put it in your mouth if it wasn't so reassuringly expensive. With reverence, we poured it into white china saucers and offered it round to the supper guests with warm flatbread.

Tasting the oil was a show in three acts: the first, smooth and scented; then a trumpet blast of green pepperiness and a long, redolent finale that brought out the guests' fancy adjectives: “almondy”, “citric”, even “raw caulifloweresque”. The words I used were “acidic” and “scary”.

One of the great dates in the foodie calendar has arrived, and the new season's olive oil is in the shops. Around the Mediterranean, olives are harvested between late October and mid-December, and the fruits of the first pressing are much prized, with prices to match. Last week I tasted two varieties, picual and arbequina, from a grand Spanish estate, the Castillo de Canena in the Guadalquivir valley. These oils weren't just virgin, or early-season - the really, really green one boasted of being “first day of harvest”.

Rosa Vañó, whose family have run the estate since 1790, explained that the colour comes from pressing the olives so early that they are more green than purple. When, still reeling from my first explosive taste, I questioned whether that was actually a good idea, Ms Vañó nailed me with a cold look that was pure Andalusian aristocrat: “But can't you see - it tastes of olives!” She was right, it did. And olive oil usually doesn't.

The British are fairly ignorant on this subject. After all, only a generation ago we used olive oil mainly for drizzling into children's ears. Now most self-respecting English kitchens contain a bottle of extra virgin and a bottle of ordinary. Yet, of all the continental foodstuffs that we have welcomed to these shores, olive oil remains particularly mysterious. What's so good about “cold-pressed”? How much more virginal can an extra virgin be?

In my local Italian deli there are many brands of olive oil, at up to £50 a litre. The price labels are the only things on them that mean much: what, you wonder, looking at one gold-wrapped “extra vergine”, does “superior category” mean? And if this oil has been “obtained directly from olives and only by mechanical means”, what does that say about the cheaper ones?

These are the signs of a business in a mess and, of course, Italy has suffered many olive oil scandals (the Mafia has a finger in the barrel, apparently). With some green colouring and good-quality rapeseed or soya oil, it's quite easy to fool the punters.

But more shocking is the fraud that is permitted by Italian law. “Extra virgin” has no regulated meaning. And “Italian olive oil” says no more than that it was bottled in Italy. The oil may well have come in a tanker from Tunisia.

Rosa Vañó was not impressed when I asked how we could trust her olive oil. “Look at the label,” she said. “It's the family reserve! It was picked on our estate! It's won a Coq d'Or [a top French prize]!”

She was more forthcoming when I asked what you could do with something so fierce-tasting; so forthcoming that she ordered up some fantastic tapas. A little dish of boned chicken wings, sautéed in her picual olive oil. A lozenge of salty manchego cheese wrapped in dried beef and dressed with the luminous green syrup of first-day arbequino. They were very good; I began to see the point.

Green olive oil is, of course, useful for cheering up a sad supermarket avocado or a salad of mozzarella, basil and tomato. But its best use is for shocking your friends: it will look fantastically lurid dribbled on to the orange surface of my winter crowd-pleaser of pumpkin, paprika and chorizo soup.

Castillo de Canena olive oils are available at Waitrose or at www.kingsfinefood.co.uk.

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