IT'S the talk of the town, city and countryside. It's the main topic of conversation at breakfast, lunch and dinner. It's the major worry for countless people trying to make ends meet.

It's the escalating price of fuel and it's an issue which could bring down the Government - on August 1 the country gets militant with a Dump the Pump day of protest.

Petrol prices in the UK are now the highest in Europe as the car becomes the single most expensive item in the household budget - costing even more than running the house itself.

In the past ten years the cost of fuel has more than doubled. In rural areas, such as large parts of the North-East and North Yorkshire, the situation is worse. There's less competition among garages and petrol stations are more remote, which increases delivery costs and puts up the price of fuel even further.

Global oil prices have risen too, and supplies have been restricted until this week when one of the major oil producers, Saudi Arabia, agreed to release more black gold on to the market.

So fill up your average car tank today and it's likely to cost you the best part of £50. But, as a garage in Buckinghamshire showed when it sold its fuel tax free, drop the Government's cut and it would cost just £11.

Almost 80 per cent of the cost of a litre of fuel goes to Chancellor of the Exchequer Gordon Brown, and the revenue generated by motorists runs into billions of pounds a year.

Tap into the official Downing Street website (www.number-10.gov.uk/) and the Prime Minister Tony Blair offers and explanation for the high cost of fuel.

He blames high oil prices, not Government action, for price hikes at the pumps, with the price of crude rising from $10 to $30 a barrel in the past year.

This means, of the 19p a litre increase in the past 16 months, only 2p is down to the Government.

A 2p cut in fuel duty would cost the country almost £1bn, he warns. Money that would have to come out of hospitals, schools, transport or fighting crime. It would amount to a saving of only £2 a month to the average motorist, he maintains.

He claims this year's increase in fuel duty is the lowest in 11 years, and VAT and duty on petrol account for 73 per cent of the cost, the lowest since August 1995.

Other measures have been implemented to help the motorist - reduced road fund tax for small cars, less duty on ultra-low sulphur petrol, cuts in tax on fuel gas.

Mr Blair says when he came to power the national finances were a mess, the national debt had doubled and the country was paying more in interest than was being spent on schools.

"It meant hard choices. One was to keep the fuel escalator which raised petrol duty automatically above inflation," he says.

"There is no easy fix, no easy solution. We are not anti-car. But we are pro-schools, pro-hospitals, pro-better public transport and pro-jobs."

High fuel prices are also supposed to have an environmental benefit by encouraging drivers to use their cars less and take public transport. Congestion will be reduced and the air quality improved. Gas guzzlers will have to pay disproportionately more for using extra fuel and pumping out more pollution.

Strong arguments put forward by the Government, but far from convincing to the campaign groups opposing high prices and to an increasing number of motorists frustrated at being fleeced at the pumps.

AA spokesman for the North-East and North Yorkshire, Denise Raven, says many people are actually paying more petrol tax than income tax.

"Motorists are being picked on as an easy target, it's the old wallet on wheels syndrome," she says.

"With the oil price increases, the Chancellor has been raking in billions which he wasn't expecting to get."

In the past 12 months, average prices have risen from 70.1p a litre to 86p. In 1990 it was just 42.7p a litre and the tax was 60 per cent. The Chancellor's levy on fuel brings in £23bn a year and £5.2bn in VAT.

An average motorist living in a rural area and covering 10,000 miles a year can expect to pay £1,130-a-year to the Government in tax on petrol. Someone earning £10,000-a-year would only pay £1,053-a-year income tax.

A survey by the AA also reveals that motoring is now the highest weekly expense for car-owning families and has overtaken food and housing costs for the first time.

About £70-a-week, or 17 per cent of household expenditure, goes on the car, compared with £67 on food and £65 on housing. Nationally, motoring costs are lower in London at 13 per cent of the weekly budget, compared to more than 16 per cent in the North.

Unskilled manual workers spend the highest proportion of their budgets on the car at 20 per cent, professionals spend 17 per cent and, on average, a couple with two children spends 14 per cent.

While the high prices are bad for everyone, the costs also seem to broaden the North-South divide. The North doesn't suffer from the congestion of the South yet is still paying the price. A lack of viable public transport in remote areas also means that people in the North-East have no option but to drive.

Mrs Raven says: "Labour has been left with a legacy. The public transport system was in a dire state but they haven't turned it around. It needs to be given as much priority as hospitals and education.

"How are people going to get about? It's not just those in the villages, it's in the suburbs as well. You don't have to go far out of Darlington before you find your last bus is at 10pm.

"People are cutting back on journeys that don't cause the congestion, such as seeing the family and taking the kids out; they cannot cut back on work journeys. We have got to say enough is enough, we need a fairer deal for motorists."

The Petrol Retail Association has just had talks with Tony Blair, putting the case for drivers and petrol station owners.

Its director Ray Holloway says: "This is no longer an industry, it is a charity. When a motorist sits on the forecourt and sees 86p per litre he thinks the retailer is taking 20p - he is actually getting 2p. Three quarters of the pump price is tax.

"I have been in this industry for the past 30 years and have never known a subject catch the imagination of the general public as this has."

Fuel prices hit the public hard, both in the expense of motoring and in the general cost of living.

The Road Haulage Association has campaigned the longest about the spiralling cost of fuel because the burden is being passed on in the form of price increases on consumer goods.

RHA spokesman Steve Williams says the high prices are putting operators out of business and are also having an impact on everyone.

"It's no use having low income tax when you are paying through the nose for fuel," he says. "There is no alternative. More than 80 per cent of goods go by road. Even if the railways were 100 per cent efficient they could only take another three per cent."

Fuel companies are now asking hauliers for a £10,000 bond before allowing them bulk deliveries in case they go bust before they pay their fuel bill.

He says: "We have been faxing MPs for months and it hasn't meant anything. But the public are now getting involved and next year is voting time. What will frighten the Government is them putting the X in the wrong place."