[[{“value”:”Reuters: To learn how this global industry works, reporters made multiple buys of precursors over the past year. Though a few of the sales proved to be scams, the journalists succeeded in buying 12 chemicals that could be used to make fentanyl, according to independent chemists consulted by Reuters. Most of the goods arrived as
The post Markets in Everything: Fentanyl Precursors appeared first on Marginal REVOLUTION.”}]]
Reuters: To learn how this global industry works, reporters made multiple buys of precursors over the past year. Though a few of the sales proved to be scams, the journalists succeeded in buying 12 chemicals that could be used to make fentanyl, according to independent chemists consulted by Reuters. Most of the goods arrived as seamlessly as any other mail-order package. The team also procured secondary ingredients used to process the essential precursors, as well as basic equipment – giving it everything needed to produce fentanyl.
The core precursors Reuters bought would have yielded enough fentanyl powder to make at least 3 million tablets, with a potential street value of $3 million – a conservative estimate based on prices cited by U.S. law enforcement agencies in published reports over the past six months.
The total cost of the chemicals and equipment Reuters purchased, paid mainly in Bitcoin: $3,607.18.
I don’t doubt that Reuters did what they say they did. I have trouble believing, however, that the implied profit margins are so high. A gram of cocaine costs about $160 on the street and $13 to $70 trafficked into the US and ready to sell. Thus, the street price to production cost is at most 12:1 and perhaps as low as 2.3:1. Note that this profit margin includes the costs of jail etc. I think Reuters overestimates fentanyl street prices by a factor of 2 which would still give a ratio of 415:1 which is way too high. Let’s say fentanyl sells for $1.5 million on the street then to get the ratio to a very generous 20:1 we need costs of $75,000 so my guess is that Reuters has underestimated costs by a significant amount in some manner.
Happy to receive clarification or verification from those with more expertise in the business.
I do accept Reuters point that fentanyl is cheap and easy to produce.
The whole story is excellent.
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Economics, Food and Drink, Law, Medicine
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