DEA HOPEFUL OVER DROP IN COCAINE

But Officials Note Other Disruptions Were Short-Lived

When the price for a kilo of cocaine in Nashville jumped by nearly a
third five months ago, police knew something was up.

For nearly a decade, the Drug Enforcement Administration says cocaine
prices have been rock-bottom at about $95 for a gram of pure cocaine.
So when agents at the DEA heard of the sudden price spikes in
Nashville, Cleveland, New York, Los Angeles and elsewhere, they began
investigating.

A tenet of U.S. efforts in the "war on drugs" is keeping drug prices
high by limiting the supply.

"If the price of cocaine goes up, it might bar entry (into drug use)
by young people who simply cannot afford it," says DEA intelligence
chief Tony Placido. "The real challenge will be how long we can
preserve this trend."

The DEA found a broad drop in the quantity of cocaine at the top
levels of the supply chain in every region of the country except the
Pacific Northwest, according to a recently declassified DEA analysis.

The analysis found the most significant decreases in supply and
largest price increases for big suppliers rather than street-level
dealers, suggesting dealers may be selling cocaine that is less pure
to keep prices stable for regular customers.

Prices varied throughout the country:

.In New York, the price for a kilo of cocaine doubled from $17,000 to
$34,000, Placido says.

.In Los Angeles, where a kilo has cost around $13,000 for nearly a
decade, prices edged up to $19,000 over the past year, says DEA
Special Agent Sarah Pullen, the agency's Los Angeles spokeswoman.
"There's a definite reduction in supply," she says. "Organizations
are having a hard time getting it from their sources in South America."

.In Nashville, police in April noticed a kilo that sold for $18,000
to $20,000 a year ago was selling for $27,000, police spokesman Don
Aaron says. Supply also decreased. "And we think a major explanation
for that is the strengthening of the border between Mexico and Texas
and Arizona," he says.

Prices in Nashville have decreased slightly in the past two weeks,
but price fluctuations are normal, Aaron adds.

Philadelphia says any decrease in its cocaine market was short-lived.

"We had seen some lulls over the course of the year. We saw some
tightening up over the market," says a police spokesman, Capt.
Benjamin Naish. "Cocaine is available. The price is stable."

Peter Reuter, a University of Maryland professor who studies drug
policy, says it is too early to declare the recent price spikes a
trend, but he says the odd patterns bear watching.

"What I know of the data supports the notion that there is something
out there," he says. "There have been these kinds of interruptions
before and turned out to be short-lived. How permanent this is, there
is absolutely no way of knowing."

DEA analysts examined 11,538 domestic cocaine samples tested in their
labs from April 2005 though June 2007. On average at all levels of
the supply chain, the price jumped 24% between January and June 2007,
Placido says.

Midlevel wholesale cocaine purchases from 1 to 10 ounces showed the
largest price increases -- 33% -- from $53.09 to $70.30 per pure
gram. Street-level sales up to 10 grams increased 15%, from $145.42
to $166.90 per pure gram.

To confirm their findings, DEA analysts also studied 6,613 cocaine
purchases and seizures logged by the Justice Department's National
Forensic Laboratory. They found a significant decrease in the purity
of the cocaine seized.

A June 5 report from the Justice Department's National Drug
Intelligence Center also concluded the cocaine supply had decreased
in several big and midsize East Coast markets over the previous four
months as prices increased.

It attributed the market disruption to large seizures of cocaine in
transit from South America to Mexico and major busts of key players
in Mexican drug-trafficking groups.

Prices for methamphetamine rose 37% this year to $194.25 per gram, a
separate, recently declassified DEA brief says.

Although the prices have not reached the peak levels seen in the
first six months of 2006, DEA analysts say it may be another
indication that traffickers are having a tough time moving their
products through Mexico.

About 80% of methamphetamine in the USA is from large labs in Mexico.

DEA analysts examined drug busts, chatter among traffickers and
cultivation to determine what caused a drop in supply. Agents had
made several large busts in the previous six months, but not enough
to cause a severe decline, Placido says.

Analysts found that Colombia, Peru and Bolivia, the main source
countries for the U.S. cocaine supply, are growing and shipping the
same amount of cocaine as in previous years.

"There is not more or less cocaine entering the pipeline," Placido
says. Instead, he says, Mexican authorities apparently are stopping
the cocaine before it gets to the USA.

Reuter says this isn't the first time the Mexicans have gotten tough
on traffickers. "The Mexican government is clearly cracking down, but
the government has cracked down before to no effect," Reuter says.
"It's sort of early days for declaring that something important has happened."

Eventually, drug traffickers will develop new routes to get around
whatever is stopping them, says Alfred Blumstein, a professor who
specializes in criminology at Carnegie Mellon University in Pittsburgh.

"It's a resilient process," Blumstein says. "I would anticipate that
over a period of time, like six months to a year," the drug
traffickers will "be back in shape."