As Japanese motorists fought for a place in the “great petrol rush” they could have been forgiven for thinking it was all a huge April Fool's joke — a massive overnight plunge in pump prices despite the soaring global cost of crude oil.

To make yesterday's frenzy at the pumps still more implausible, on television the night before Yasuo Fukuda, the Prime Minister, actually apologised for the petrol bonanza — a fall of 12p per litre. How could Japan present itself as environmentally friendly and a reducer of emissions, he asked, when it had taken the “backward move” of making petrol cheaper?

But while it may look surreal, the sudden 15 per cent drop in petrol prices is the symptom of a real crisis: a political meltdown that has left the world's second-biggest economy with no governor of its central bank, its national budget in jeopardy and its leadership on the verge of collapse.

Perhaps worst of all is what the embattled Prime Minister described as the “gaping” £13billion hole in Japanese tax revenues, caused by a deadlock that has rendered the Government unable to legislate. Senior MPs have told The Times that they are now preparing quietly for a snap general election this year. Some believe that it could come as early as May.

Japanese motorists know perfectly well that the fall in petrol is only temporary. Prices were cut because the ruling Liberal Democratic Party (LDP) was unable to get through a special tax on petrol and diesel.

Many motorists delayed filling up until yesterday as the political deadlock worsened, but they suspect that the tax issue will be resolved eventually as the Government pushes through a compromise. All over Japan local governments, whose budgets have been signed off but which will now miss out on billions of yen in tax revenues, are desperate for a solution before the start of the new financial year.

For historical reasons the petrol tax has only ever been provisional, but has been renewed without difficulty nine times over the past 34 years. But in July the LDP lost its majority in the upper house and realised for the first time quite how powerful the chamber really is.

Since 1955 the LDP had maintained a near-unbroken grip on both houses, and the upper chamber has served as a rubber stamp. But the opposition Democratic Party of Japan (DPJ) under its volatile leader Ichiro Ozawa, has used its unprecedented majority in the upper house to block nearly every Bill the Government has tried to pass.

One ruling party MP said that she and her colleagues were working on the assumption that the political crisis would soon reach breaking point — possibly triggering a long-speculated realignment of the two main parties.

Under its temporary leadership the Bank of Japan flooded the financial system yesterday with a record three trillion yen of liquidity — an undertaking that normally demands a governor who exudes confidence.

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