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Gov Watch

Is There a 'Cocaine Shortage'?


Mexican Marines guard large cocaine haul in November

"It's unprecedented...This is not only the deepest shortage [in the retail cocaine market] but it's the longest we have seen."


--White House Drug Czar John Walters,`interview with Washington Post, November 9, 2007.


"We've never had disruptions of this magnitude before."


--Walters press conference in Bogota, Colombia, November 7, 2007.


A reality check in the "war on drugs." Drug Czar John Walters touted similar disruptions to the cocaine market in the United States back in 2005, but the progress turned out to be short-lived. Is there any reason we should believe him this time? Unfortunately, the statistical methodology used by his office and the Drug Enforcement Administration is extremely opaque.


The Facts

Success in the war on drugs is often measured by examining changes in the price of cocaine, particularly the street price paid by American consumers. If supplies are disrupted, the price will rise. It was therefore reasonable enough for Walters to point to a 44 percent spike in median cocaine prices between January and September as a significant development. The question is whether the price increase is "unprecedented," and how long it will last.

Despite repeated requests, the Office of National Drug Control Policy has declined to provide historical data to support the director's claim about the "unprecedented" nature of the price increase. The only data they will supply goes back to 2005, which is precisely the time when Walters last claimed a major decline in the availability of cocaine.

The chart used by Walters to trumpet his "unprecedented" claim is published below. The data has been drawn from the STRIDE database maintained by the Drug Enforcement Administration, which includes records of thousands of domestic drug purchases by undercover agents at both the wholesale and retail level. The Walters data represents the "mean", or average, price of all these purchases. It is impossible to tell from the way the data is presented how much cocaine has been bought at what level, a crucial distinction since the retail price is typically several times higher than the wholesale price. The prices are all current prices. (Had the prices been adjusted for inflation, the pre-2007 line would be downward, rather than flat.)

Neither Walters' office, nor the DEA, publishes cocaine price data on a regular basis, so historical comparisons are almost impossible. The best available data comes from a 2004 study by the RAND Corporation, which looked at cocaine prices between 1981 and 2003. The RAND analysts used DEA data, but they broke it down to examine different sections of the market, such as less than two grams (a typical consumer purchase), two to ten grams, above ten grams, and so on. They also adjusted prices for inflation, measuring everything in 2002 dollars. The RAND analysis, available here on the drug czar's website, showed a steady decline in the price of cocaine to the American consumer over more than two decades, interrupted by occasional spikes.

Here are the RAND/DEA figures for the price of pure powder cocaine, per gram, based on purchases of two grams or less, between 1981 and 2003:

The most striking point in this graph is the long-term downward trend in retail cocaine prices, despite all the efforts at interdiction undertaken by successive U.S. administrations. By eyeballing the chart, you can see that there were significant price spikes in 1982, 1990, 1994, and 2000, which are comparable to the recent increase. Each spike was followed by another sharp decline, as producers responded to the higher prices. Compared to historical levels, cocaine prices are still very low, particularly if you factor in inflation.

The RAND data is not strictly comparable to the latest DEA data as it measures the retail slice of the market, rather than average purchase prices. (RAND data for other slices of the market show similar peaks and troughs.) But it certainly suggests that policy-makers should be more cautious in using terms like "unprecedented."

"We have had three or four similar increases in the past 20 years," said John Carnevale, director of the drug czar's planning and budget office under George H.W. Bush and Bill Clinton. "Cocaine prices go up and go down, but the long-run trend is one of decline. The increases were temporary, and did not have any effect on the market in terms of reducing demand that we could discern."

One of the principal authors of the RAND study, Peter Reuter, a professor of public policy at the University of Maryland, said he was troubled by the way the DEA and ONDCP (the drug czar's office) kept changing its statistical methodology. "I don't understand why they don't run the series the same way (as RAND), just to remove any doubts that the data is solid. It would be much more convincing if they did that."

I called ONDCP to get its side of the story after the Washington Office on Latin America, which has long been critical of U.S. drug policy, debunked the Walters claim in an analysis, available here. Chief scientist David Murray said he would provide a full set of historical data to support the director's statements, but later withdrew the offer, saying that DEA would not authorize release of the information. He criticized the WOLA analysis, saying the group was comparing "oranges with hubcaps." The ONDCP critique is available here.

Other indicators cited by Murray include a drop in drug use in 2006 among some American workers and "law enforcement reports" suggesting a "cocaine shortage" in some American cities.

There is considerable skepticism about the drug czar's data in Congress, among both Democrats and Republicans. The co-chair of the Senate Caucus on International Narcotics Control, Sen. Charles Grassley (R-IA), noted that the Department of Justice recently reported that "cocaine availability could return to normal levels in late 2007 and early 2008," an assessment that appears to undermine the upbeat claims of the drug czar.

"I hope we are making progress, but I am not ready to crow yet," said Grassley.

The Pinocchio Test

Drug Czar John Walters has failed to provide historical data to back up his claim of an "unprecedented disruption" to the cocaine market. That would appear to end the argument, but I understand this is a complicated subject, so I would like to hear your views before issuing a verdict. It would be good if we could drag some more data out of DEA and ONDCP. If they think they have a valid case, they should put their data where their mouth is.

VERDICT PENDING

(About our rating scale.)

Posted on November 21, 2007 at 6:00 AM ET  | Category: Gov Watch, Health, Other Foreign Policy, Social Issues, Verdict Pending
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Comments

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Druglords are not stupid. In Fact, they are smart business men. Since the $ is loosing value rapidly (maybe $ even will vanish as the world leading currency), they ship the drugs to EU. And invests in the Euro markets. By the way, the same effect will you see on the oilprices. OPEC discusses to change the Oilprice into €...
Greetings from Switzerland

Posted by: dan | November 21, 2007 6:42 AM

I think you need to look at factors outside of DEA enforcement. It is only recently that the Bush administration has began cracking down on border enforcment of illegal immigrants crossing the U.S. border. These illegal immigrants are often used as "mules" to carry backpacks full of drugs for drug smugglers into the U.S.. It may be that the increased border enforcement is what is limiting the supple of cocaine into the U.S. If border enforcment weakens you might see the supply of cocaine rise again.

BCP
http://beercanpolitics.blogspot.com

Posted by: BCP | November 21, 2007 7:08 AM

it's fairly easy to test this - just go down to your local drug corner and see if the $5 crack rock has gone up in price...

...it hasn't? hmm, something must be wrong here...

besides, if the drug war was "won", this guy would be out of a job...

the war on drugs should be renamed the "war to provide useless employment for law enforcement, lawyers and private prison guards".

Posted by: vaporland | November 21, 2007 8:24 AM

If it comes from the mouth of ONDCP, you can bet it's a lie.

Posted by: Jerry | November 21, 2007 8:39 AM

Could you explain to a non-econ background reader why the upward spike in prices couldn't be explained by higher demand (i.e. more users for the same quantity of drugs). That is, why is it "reasonable" to accept that higher prices reflect that matters are going well rather than poorly in this "war". Many thanks

Posted by: DM | November 21, 2007 8:50 AM

Yup, gotta agree with DM. Supply and demand work together to affect the price of products. It would be great if you could map the estimated levels of cocaine usage on the same graph showing the price of cocaine. it would be a great comparison. As cocaine was popular in the 80s and less popular in the 90s, it is possible that the lower prices in the 90s reflect the lower demand. In addition, the lower prices in the 90s will also reflect the increase in cocaine production that occurred in response to the high demand of the 80s. Kind of like oil.

Posted by: Ryan | November 21, 2007 9:00 AM

The whole "war on drugs" is based on a huge falsehood: ONLY THE SUPPLY SIDE COUNTS. For drug enforcement advocates, there is no such thing as a DEMAND for drugs.

So, they believe any change in price MUST be explained by some change on the supply side.

The real problem is this: even a WP factchecker gets fooled by the obscure methodology employed by drug enforcement officials.

We're still waiting for the WP to publish SOME, ANY report on the demand side, that addresses such fundamental questions as:

- What is the demand like among different age/race/economic groups?
- How has demand changed over time?
- What impact have education/enforcement actions had on demand?

Everyone who knows a little about the drug problem is aware that such reports on drug demand EXIST out there, written by prominent scientist and practitioners, from a wide range of political, economic and even religious backgrounds. But there is a big problem with those reports: THEIR COMMON CONCLUSION IS... THE WAR ON DRUGS IS A FAILURE, AND THE ONLY REASONABLE WAY FORWARD IS.... LEGALIZATION.

That would mean the elimination of the DEA. And, of course, WP editors suffer of panic attacks at the very mention of eliminating a Washington bureaucracy.

Posted by: BERRY | November 21, 2007 9:18 AM

Mission accomplished!

Posted by: Mr. Derp | November 21, 2007 9:35 AM

The UN and international authorities have noted increases in cocaine use in Europe and in Africa. The UN Office on Drugs and Crime has been warning for the past few years about increasing amounts of cocaine being transshipped through Africa to Europe. Cocaine production has been at very high levels for years. If there has been any change in cocaine availability in the US it is more than anything else due to traffickers making the logical business decision to ship their surplus to a more lucrative, expanding market rather than to the US. This also cuts out the Mexican cartels who currently earn money serving as middlemen for the much of the US-bound cocaine.

Posted by: Doug McVay | November 21, 2007 10:02 AM

The price of almost everything is going up because the value of the dollar is declining. Plus, the DEA reports that Latin American drug cartels are shipping more drugs to Europe instead of the U.S. because prices are higher there. As a result, prices are now falling in Europe and rising in the United States. At some point traffickers will make the switch back to the U.S. In any event, higher cocaine prices mean more money for drug cartels. The higher the price goes the more money people can make selling cocaine. In other words, higher prices leads to more trafficking not less. This is why DEA Administrator Karen Tandy was in Europe in May warning government officials that high prices there will mean more traffickers shipping drugs to Europe.

Posted by: Bill Piper | November 21, 2007 10:08 AM

One factor for the decline of cocaine retail prices during the 1990s might be Marion Barry's inability to buy cocaine while being incarcerated.

Posted by: Not Tim Page | November 21, 2007 10:27 AM

What an embarrassment for ONDCP. Look at what they wrote on their blog last Friday, expecting this Fact Checker piece to come out in their favor:

"On a more optimistic note, WOLA apparently sent their press release claim to the Washington Post reporter Michael Dobbs, who runs a "Fact Checker" feature for the paper. At Dobbs' request, we have provided the full data story correcting the record about WOLA's claims, showing why their assertions are off the mark. We look forward to a fair accounting of the situation."

http://pushingback.com/blogs/pushing_back/archive/2007/11/16/38318.aspx

Posted by: Tom | November 21, 2007 10:56 AM

If you factor in the collapse of the US dollar cocaine has never been so cheap. Good thing the US is it does not have to pay for this stuff with European euros or Canadian dollars!

Posted by: redman | November 21, 2007 12:05 PM

ONDCP will continue to put out these claims of "unprecedented disruptions" because they can continue to manipulate the data using their faulty and shifting methodology to continue to make the bogus claim that the "war on drugs" is succeeding.

But that's what they have to say. The "drug czar" has to come out and say we are winning this "war on drugs". If he doesn't, then it's a failure (and I believe if the Post polled Americans, a vast majority would say it is an absurd failure).

ONDCP knows who butters their bread. They need to claim "unprecedented disruptions" otherwise the tax dollars that make up their budget wouldn't increase year to year.

The reality is that the "war on drugs" has gone about as well as the "war on terror". And it's time to rethink our approach to drug abuse. It's time to re-examine this problem as a mental health issue; otherwise we will continue to steadily increase our prison population because of non-violent, minor drug offenses.

Heaven forbid we have a president one day who has the courage to call a spade a spade and acknowledge that the "war on drugs" is a farce and a waste of our tax dollars.

Posted by: corbett | November 21, 2007 12:09 PM

The ONDCP should be excommunicated from the federal government. The nonsense they put out is startling.

"White House Drug Czar John P. Walter...has said that arguments for medical marijuana make no more senese than 'an argument for medicinal crack." - Washington Post, May 23, 2003.

Lies: (1) The premise is misleading. There is medicinal crack. In fact, cocain is often prescribed to sick people - hence it's schedule II status. (2) Medical marijuana has been shown to work in several scientific studies, including one that was funded by the federal government's Institute of Medicine.

Posted by: william | November 21, 2007 12:46 PM

The "war on drugs" is the most wastefull and costly war America has ever fought. We have been at it for 70 years. What have we accomplished?

Answer: Nothing!

Posted by: brogg | November 21, 2007 12:50 PM

Of all of the counter-productive things the federal government does, the "War on Drugs" takes the prize.

Compared to it, Iraq is stunning success.

Unfortunatly, there is very little sensible policy suggestions coming from either party on this issue.

Legal pot would be a good start.

Posted by: Paul Falduto | November 21, 2007 12:54 PM

Anyone who believes the 'war on drugs' is working should watch the drug episode of Penn & Teller's Bulls**t! on Showtime. One example: from the 1920s to the present, heroin prices have gone down while purity has gone up. Also, marijuana these days is far more potent than the pot the hippies smoked back in the 60s.

The war on drugs is a waste of time & resources. The black market of drugs is far worse than the drugs themselves. Look to the 1920s people. Prohibition never solves anything.

Posted by: Liz | November 21, 2007 2:10 PM

The war on drugs has been lost long time ago, actually colombians have paid the high price of this "illegal business". if this was a legal business there were no so much profit for those criminals and mafias, including the USA cartels that never are mentioned in the media nore by the goverment. You can kill as many Pablo Escobars, but more of those will rise, becuase cacaine still a product which it is use on a daily basis in the USA and the world, for this reason the business will never end, this is not about the baclk guy selling a gram in the corner, this buisnes move billions of Dollars each year. Colombians still asking for respect everytime a cocaine joke comes aorund becuase no body realize how many GOOG people has been killed in Colombia by the mafiosos and guerrillas, USA cocaine users support terrorist down in Colombia when they buy their product

Posted by: Colombian | November 21, 2007 2:18 PM

This is just more of the same from ONDCP.

I studied ONDCP claims making from 2000-2007 and found a consistent pattern spinning and selective presentation of data, as well as outright lies by ONDCP in its drug war.

ONDCP misleads the public and policy-makers by presenting selective and improper statistics, and by making claims that are found to be false under even casual fact-checking.

With regard to drug prices, availability, and purity, ONDCP does not even discuss these data in its National Drug Control Strategy. The reason? None of the trends are consistent with their goals.

My research is published in the book, "Lies Damned Lies and Drug War Statistics" (State University of New York Press, 2007).

http://www.sunypress.edu/details.asp?id=61382

Matthew Robinson, PhD
robinsnmb@appstate.edu

Posted by: Dr. Matt Robinson | November 21, 2007 4:59 PM

This is just more of the same from ONDCP.

I studied ONDCP claims making from 2000-2007 and found a consistent pattern spinning and selective presentation of data, as well as outright lies by ONDCP in its drug war.

ONDCP misleads the public and policy-makers by presenting selective and improper statistics, and by making claims that are found to be false under even casual fact-checking.

With regard to drug prices, availability, and purity, ONDCP does not even discuss these data in its National Drug Control Strategy. The reason? None of the trends are consistent with their goals.

My research is published in the book, "Lies Damned Lies and Drug War Statistics" (State University of New York Press, 2007).

http://www.sunypress.edu/details.asp?id=61382

Matthew Robinson, PhD
robinsnmb@appstate.edu

Posted by: Dr. Matt Robinson | November 21, 2007 5:00 PM

One of the few generalities that I can state with conviction:

Anyone in the USA who wants to buy cocaine will acquire it without much trouble or expense. The Drug War has never once had any impact on this pure fact.

Sad.

Posted by: Willie | November 21, 2007 7:47 PM

not a user, but wise to the price and the mean price per gram is inflated (as if you were buying from a guy in front of the local Police Station).

Posted by: not a Pinocchio | November 21, 2007 8:53 PM

Lots of great comments here, although I don't think straight legalization is uncomplicated either.

To the main point though: they can't draw supply conclusions based on price unless they control for:
-the dollar devaluation
-domestic demand
-the increasing worldwide demand as other countries get rich enough to afford chemical

If you look at it broadly, it's hard to justify the money spent on this war. Let's say this guy is right and border enforcement has made it harder to smuggle (like the big tunnel they shut down). Does the high price on the streets make the drug trade better or worse? No real data there, but one could imagine that a limited supply could increase competition in a negative way...

Posted by: matt | November 21, 2007 10:29 PM

The chart above shows 2005 cocaine prices virtualy flat, ranging from $92 to $101, but DEA's 2008 budget submitted to the Congress shows a 58% price increase, in the $25 to $39 range. What is going on? Looks like more smoke and mirrors to me.

Posted by: confused in NC | November 22, 2007 1:17 PM

Colbert gravel kucinich paul nader perot carter [conyers?rangel?] united for truth elicit fear smear blacklist.

The people know too much,
democracy rising democracy now.
Rage against the machine.

Honesty compassion intelligence guts.

No more extortion blackmail bribery division.
Divided we fall.

Posted by: gravel kucinich paul nader | November 23, 2007 7:40 PM

The very basics, if the dollar value goes down, the price goes up to equalise profit margins.
This is a global business dictated by profit, if one outlet suffers a currency devaluation, the prices rise.

Quid Pro Quo.

Posted by: Oblomov | November 25, 2007 6:50 AM

Demand has been steadily increasing. The number of Americans who used cocaine within the past month increased from 2 million in 2002, to 2.4 million in 2006.
http://oas.samhsa.gov/NSDUH/2k6NSDUH/2k6results.cfm#Fig2-2

Posted by: Sparky | November 25, 2007 10:41 AM

Another thought...

ONDCP is claiming that a recent decrease in the number of people testing positive in the workplace is evidence of a lack of supply. Even if one assumes they are correct here, it has very little impact on the amount of overall consumption. About 20% of the cocaine users consume about 80% of the supply. It is unlikely that those heavy users would be affected by a price increase, because they are either a) rich, or b) committing crimes to pay for their habit. The majority of users (occasional users) would be the most likely to have jobs requiring drug testing. So, even if, say, a quarter of those users (comprising 20% of total users) were to quit because the drug is too expensive, there would only be a 5% decrease in overall consumption.

The failure to distinguish between use and abuse plays heavily into the simplistic, distorted picture that organizations like ONDCP tend to paint. The regions of the country that have apparently been affected by this lack of supply have seen an increase in drug-related crime, which is the only significant effect of driving up price. Drug substitution is another possible outcome. Non-medical use of prescription drugs has been on the rise as well.

Why are people so resistant to trying something different, at least on a small scale -- experimentally? The current US approach hasn't worked in 37 years. Trying something different is NOT giving up. Refusing to try something different is insane.

Here's a great example of an effective solution to decreasing demand, helping more addicts quit, drastically improving health and quality of life for those who don't quit, disrupting the market, and reducing crime, all at the same time:
http://www.popcenter.org/Library/CrimePrevention/Volume%2011/04-Killias.pdf

Posted by: Sparky | November 25, 2007 1:03 PM

To: gravel kucinich paul nader:

What - your blog tells me you might be a living example of drug use.....

Posted by: Anonymous | November 26, 2007 11:04 AM

Someone mentioned other drug substitutes.
Once drug users are exposed to methamphetamine, cocaine and heroin use often declines. Crank is cheaper,lasts longer per dose,it's easier to get, harder to quit and may be more addictive, etc.

Posted by: grizzle | November 26, 2007 9:02 PM

"Until you violate the rights of another; do as you will should be the law of the land."

The only thing that is more irrational than the War on Drugs; is the logistical reasoning of those who wage it.

Honestly, what's wrong with me--college educated, taxing paying, active voter--smoking pot in my home? Hell, or walking down a NYC block for that matter? Who am I hurting?

What message are we sending to the children?
A potentially organic plant that grows in virtually every climate; that has NEVER been linked as a direct cause of death, and has a plethora of beneficial uses: medically, spiritually, and recreationally.
Meanwhile, Tobacco kills 400,000 annually in the US; Aspirin kills another 1,000 each year; etc.

By the way Drug laws are Unconstitutional. I read the Constitution, a lot, for fun. I've never read a clause that says that the Gov't as the authority to prohibit any substance. Except for the 18th Amendment, which Prohibited the substance of alcohol; later Appealed by the 21st Amendment.

ERGO if the US Constitution needed to be Amended to Prohibit Substance A (for alcohol) the same MOST be true to Prohibit Substance M (for marijuana); and all other substances.

Don't get me wrong I am all for amending the US Constitution to Prohibit cocaine, heroine, and other dangerous HARD drugs. But our Constitution requires that we explicitly Amend it to grant the authority to do such.

Meanwhile, like Ben Harper said: "What's from the Earth / Is of Jah's greatest worth...If you don't like my fire, than don't come around / Because I'm going burn one down."

In a free society you don't need a reason to legalize something; but you do need a reason to criminalize something. There is no legitimate/rational reason to outlaw marijuana. Ergo it most be decriminalized.

'New Amsterdam' should look to Amsterdam as a case study. They have had decriminalized marijuana for decades, running smoothly, proving there's nothing wrong with it. NYC should have a licensed 'District' maybe The Village or SoHo; where coffeeshops will be allowed to lawfully operate.

Think of the tax boom for the city, the state, and the nation. Taxing marijuana is good fiscal policy.

Besides if you truly wish to regulate something, it most be legal. Alcohol, Tobacco, Prescription Drugs - all legal; and each one of them is effectively being regulated.

If you have kids in high school; ask them which is easy to buy beer or marijuana? They're not being carded when they buy a bag.

Posted by: Loss of Words in Yonkers | November 27, 2007 12:15 PM

I'm always amused by ONDCP stats such as these because of their paltry nature.

Even assuming that this is 100% accurate...this is the best you can do, ONDCP? Seriously?

SO the price went up a bit--even a lot. So what? Nothing in the historical trends that you compare this to suggests that this will be permanent.

And if it is? Again, so what? Nothing has fundamentally changed, except I gotta spend a few extra bucks, or buy a bit more often, in order to effectively cope with the monstrously dangerous policies emanating from your offices.

Don't kid yourself. The War on Drugs is about controlling the "dangerous classes" and nothing more.

Posted by: viv | November 30, 2007 5:55 PM

Hello, nice site :)

Posted by: Brin | December 1, 2007 8:14 PM

they (bushco) have no connection to reality, so any numbers they have about anything are suspect.

cocaine is MORE available, not less. if any of those know nothings spent some time on an actual street, they would know that, but actual research is beyond them.

Posted by: pre | December 3, 2007 12:28 PM

These statistics are so absurd... $135 for a gram of cocaine? Anyone who's used coke in the last several years know the price is a lot closer to $60 a gram, and $200 for an 1/8 of an ounce (3.5 grams).

Lies, lies, lies from the ONDCP.

Posted by: Ben | December 6, 2007 11:17 AM

ONDCP and the DEA are a farce. It is time to end this criminal act that is foisted on the American public under the guise of "protecting the children". Enough of the lies. There is only one way to remove the criminal/black market element from drugs. We all know what that is. But the DEA and ONDCP will tell you that the sky will fall if you even contemplate such a measure. Gee, wonder why??

Posted by: John | December 13, 2007 10:44 AM

Is it just a coincidence that the link for this story at the top of the fact-checking Obama page?? WTF??

Posted by: joshers | December 14, 2007 12:22 PM

We made a killing the first time. Wait til next season.

Posted by: Rayful Edmonds & Contracted Associates | December 18, 2007 6:23 PM

The comments to this entry are closed.

 

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