The Venezuelan government has long sold petrol at extremely low cost. The argument was that the oil itself is a national resource, the people should be made rich by having access to it at cost price. Then, given the usual Latin American propensity for inflation, the fixed price receded in the rear view mirror of sensibility. One attempt to remedy this by raising the price led to riots and at least the possibility of the overthrow of the then government.

So, as inflation climbed into hyperinflation the price wasn’t changed. It got to the point where the government monopoly didn’t bother to charge the gas stations for the deliveries – whatever price the punters were paying was just to cover the operating costs of the station itself.

This has knock on effects because the economic thigh bone really is connected to the economic knee bone. Refineries had no revenue coming in. Therefore refineries – the idea that government would allocate enough money for this is farcical – had no money to do the maintenance. Then what happens?

Almost all Venezuela’s refineries are out of operation owing to breakdowns, which have led the regime, despite having the largest proven oil reserves, to start importing petrol.

Note what happens here. When you import you’ve got to pay the world price – doesn’t matter how much crude oil you’ve got you’ve got to pay world price for the petrol. And if you import something at the world price then give it away then that gets pretty expensive.

So, Venezuela is going to start charging motorists for petrol. Good, they should do. And at least one of us – me – was arguing that they should have been doing this 5 and 7 years ago. Would have been much simpler – and cheaper, if they’d done it then, wouldn’t it?

Because there’s a simple truth about the world. It’s amazing how expensive something is when it’s free.