PRIME Minister John Howard refuses to cut fuel excise despite record oil prices pushing petrol to almost $1.40 a litre.
Motorists in Sydney, Melbourne and Canberra were paying as much as 139.9c/l today, while prices reached 137.9c in Perth and 134c in Adelaide.
And prices could continue to rise as the devastating effects of Hurricane Katrina in the US on oil markets are fully realised.
The full effect of the natural disaster were yet to be passed on to the consumer, Daiwa Securities analyst Mark Pervan said.
"I think the fallout from the hurricane damage is probably going to be larger than expected," he said.
"I wouldn't be surprised if we breached record (oil price) highs in the next few weeks."
Queensland Premier Peter Beattie, whose state uses its share of GST revenue to subsidise petrol prices, said the Federal Government should cut excise to help motorists.
"The reality is they cream off a huge amount every day," Mr Beattie said.
"(Mr Howard) can do something about it if he really wants to."
But Mr Howard said cutting the excise by enough to make a difference would cost the Government billions of dollars.
"I'm sorry, and I know this is not a popular thing to say, and I know people are hurting, but the fact is, to have any appreciable impact on the price, you're looking at billions and billions," Mr Howard said on Southern Cross radio.
The Federal Government cut the excise on petrol by 1.5c in 2001, when it removed the system of automatic indexation  saving motorists about 6.5c/l on current prices.
Cutting the excise by just 1c/l would cost the Government $380 million, and motorists would want a cut of at least 5-10c/l, Mr Howard said.
He dismissed New South Wales Premier Morris Iemma's call for an inquiry into profiteering, saying world fuel prices were out of the hands of the Government.
Mr Howard blamed Hurricane Katrina for the price spike/>P? "It is a very difficult situation," he said. "It is 100 per cent due to world market circumstances. There is very little room for the Government to move."
But he played down concerns the states were raking in huge increases in GST revenue as petrol prices rose.
"If people have got to spend more money on petrol, and they have a set amount of money each week, then they end up spending less on something else," Mr Howard said.
"And if the something else is something that attracts the GST, well what goes up with GST collections on petrol goes down with GST collections on those other items, so you don't necessarily have an increase in GST collections, or not a big one."
Australian Prime Minister John Howard has been criticised for refusing to cut the fuel excise tax as petrol prices reach up to $1.40 AUD per litre in parts of the country. The criticism by Queensland Premier Peter Beattie has been particularly vocal, claiming that the government simply does not want to lose the revenue the excise generates. The Queensland government subsidises fuel in the state with GST revenue.

"The reality is they cream off a huge amount every day. He can do something about it if he really wants to," Mr Beattie said.

Mr Howard responded by explaining the steep rise in petrol prices was due to current market trends and short-term repercussions of Hurricane Katrina. This was consistent with the statements by the Australian Competition and Consumer Commission, which explained the major reasons for the increase were Katrina and China's recent embargo on refined petrol exports.

The Prime Minister also estimated that the Federal government would lose billions in a cut of significant size. He estimated the government would lose at least $380 million for every one cent reduction, which would increase as drivers demanded a five to ten cent cut.