Motorists face continuing misery as average petrol costs stay above the £1 a litre barrier.

While a Government increase in fuel duty added to the pressure, the main driver was oil prices surging to within touching distance of $100 a barrel.

The cost of crude has risen by more than 40 per cent since the beginning of the year amid political uncertainty, supply concerns and a weaker dollar - feeding through to businesses and leading to pressure on policymakers trying to keep a lid on inflation.

On November 21, light, sweet crude for January delivery reached a peak of $99.29 - spurred on by a potent mix of supply fears in the US, political tensions in oil-rich regions and soaring demand from emerging economies such as India and China.

There were also concerns that US inventory levels would not be enough to cope with demand for heating fuel ahead of the Northern Hemisphere winter.

Middle East oil cartel Opec - the Organisation of Petroleum Exporting Countries - increased production by 500,000 barrels a day in September.

But despite calls for Opec to pump even more crude into the market as supplies become particularly vulnerable to unplanned stoppages or surges in demand, the group decided against raising oil production in December.

According to the US Department of Energy, oil producers turn out around 85 million barrels a day globally, while consumption is between 85 million and 86 million barrels a day. These supply concerns are set against a backdrop of ongoing problems in the Middle East, with fears of escalating fighting between Turkey and Kurdish rebels also contributing to the recent price rises.

Northern Iraq is not itself a big oil producer, but the fear is that conflict in the region could escalate and spill over into other countries.

The upward pressure on prices has also been exacerbated by the weakness of the dollar, which has seen traders buy into oil as a hedge against the falling greenback.

The US dollar has hit fresh 26-year lows against the sterling, while falling to record lows against the euro. The pound has also spent much of the year above the two-dollar mark, only falling below that level in recent days as expectations that the Bank of England will cut interest rates next year were reinforced.

Although slowing global growth next year should go some way to cooling prices, demand is still a key issue.

The International Energy Agency expects global oil demand to grow by 2.2 per cent a year, having recently upped its previous fore-cast of two per cent.

A 2.2 per cent rise would see daily demand increase by 1.9 million barrels a day to 95.8 million barrels by 2012.

Part of the problem is that industrialised countries are now hugely reliant on oil and not just for energy and transportation, but also for manufacturing fibres, plastics, fertilisers and detergent.

The anticipated increase is also driven by increasing demand from China and the Middle East, according to the IEA. The body believes that India and China will account for 45 per cent of the increase in global primary energy demand through to 2030, when the world's energy needs are expected to be well over 50 per cent higher than they are today.

Oil is also a finite resource and the IEA predicts that supplies will slide sharply from 2009, with declines in particular set to hit mature oil producing areas, such as Mexico, the US and the North Sea.

New supplies of crude from the US Gulf of Mexico, Brazil and sub-Sahara Africa may provide some relief for stocks. Biofuel, such as ethanol, is also increasingly being turned to as an alternative to oil, although there are fears that it will not provide much relief.

Experts are also concerned that increased investment in biofuels will see Governments cut investments in hydrocarbon development.

For the UK consumer, the impact on prices at the petrol pump is unfortunately not the only direct hit to the pockets. Consumers should also be prepared for a surge in utility bills - British Gas owner Centrica warned of a "challenging" environment earlier this month - and a rise in food and goods prices as manufacturers and businesses pass on the extra costs.

Rising fuel costs has already seen food producers raise prices, although manufacturers have where possible sought to absorb the additional expense, according to recent comments from manufacturers' organisation, the EEF.