Explosion danger: U.S. marijuana oil labs pose deadly, destructive hazard

A suburban home that was the site of a hash oil extraction laboratory explosion is seen in the Mira Mesa area of San Diego, California, U.S., May 5, 2019. San Diego-Fire Rescue Department/Handout via REUTERS

By Andy Sullivan

SAN DIEGO(Reuters) – On the afternoon of May 5, college student John Nothdurft was watching TV at his suburban San Diego home when a series of explosions shook the house. Around the corner, on Sunny Meadow Street, flames billowed from a neighbor’s garage.

A man was running down the street. He was on fire.

Nothdurft, 18, tried to comfort the man as a neighbor sprayed him with a garden hose. “His skin kind of looked like it had melted off,” he recalled.

Investigators quickly determined the cause of the blaze: a butane-gas explosion resulting from an illegal attempt to make a concentrated form of marijuana. Known as hash oil or honey oil, the product can be consumed in vape pens, candies, waxes and other forms that are increasingly popular.

The Sunny Meadow Street explosion illustrates a growing danger as marijuana moves from the counterculture to the mainstream, law enforcement officials told Reuters. With cannabis now legal for medical or recreational use in 33 states and the District of Columbia, users are discovering new ways of consuming the drug.

Nationwide, concentrated products accounted for nearly a third of the $10.3 billion legal market in September 2018, double their share in 2015, according to the New Frontier Data research firm.

In states like California and Colorado, where marijuana use is legal, state-licensed producers of hash oil use sophisticated systems that can cost hundreds of thousands of dollars. But those seeking to make hash oil at home don’t have to spend that much. YouTube videos demonstrate how to strip the psychoactive THC compounds from marijuana using a PVC pipe, a coffee filter and a $4 can of butane.

Production is surging on the black market – especially in California, where the legal market is still dwarfed by an underground network that supplies users across the country.

A “dab” of hash oil can contain up to 90 percent THC – more than four times the strength of typical marijuana buds.

“I will never forget my first time I ever took a dab,” said Sabrina Persona, assistant manager at Harbor Collective, a licensed marijuana dispensary in San Diego. “It’s some pretty strong, pretty concentrated stuff.”

Making hash oil can be lucrative – Persona pointed to a small jar retailing for $45 – but it is also risky. Odorless and heavier than air, butane can build up quickly in enclosed spaces – until a spark from a refrigerator motor or a garage-door opener sets off an explosion that can knock a house off its foundation or destroy an apartment building.

Nationwide, the U.S. Drug Enforcement Administration (DEA) says it received reports of 260 illegal hash-oil labs in 2017, a 38 percent increase from 2016. A quarter of those labs were discovered because they caught on fire, according to the agency’s annual drug threat assessment.

Those figures are far from comprehensive, as law enforcement agencies aren’t required to provide reports to the DEA’s national database.

Even in California, which accounted for two-thirds of all reported Illegal hash-oil labs in 2017, officials could be undercounting the problem. Child-safety advocate Sue Webber-Brown estimates more than 40 adults and three children were injured from hash-oil lab explosions in the state in 2016 – far higher than the official DEA tally of 16 injuries.

Even so, the DEA reports that at least 19 people have been killed and 126 people injured by hash-oil fires in California since 2014.

“A WHOLE GARAGE OF AMMUNITION”

On Sunny Meadow Street, the inferno blew a garage door 20 feet off its hinges and melted the windshield of a car. Dozens of butane cans exploded. “Boom, bang, boom bang. I thought it was a whole garage of ammunition,” said Ken Heshler, 80, a neighbor. Three people were taken to the hospital with severe burns.

The DEA says it discovered $75,000 worth of hash oil on the scene. The agency says it expects to bring criminal charges against those involved.

According to the DEA, its first report of an illicit hash-oil lab came in 2005, in Oakland, Calif. By 2013, the U.S. Fire Administration was warning that explosions stemming from hash-oil production appeared to be increasing.

Since then, officials say, the problem has grown worse. Narcotics officers in California say that the operations they encounter now tend to be larger than the home labs that proliferated earlier in the decade – with the amount of explosive chemicals measured in barrels, rather than milliliters.

These solvents “want to go boom – they don’t want to be confined, and with the slightest kind of nudge they’re going to explode, said Karen Flowers, special agent in charge of the DEA’s San Diego office.

Less than two weeks after the explosion on Sunny Meadow Street, Flowers’ office responded to another hash-oil fire in the suburb of El Cajon. That operation contained more than a dozen 55-gallon drums of hexane, another volatile solvent. Firefighters were able to control the blaze before the chemicals exploded.

The DEA also raided four other illegal hash-oil labs in the region, including one they said was capable of producing nearly a half million dollars worth of product every two days.

Explosions have been reported across the United States and Canada. In Battle Creek, Michigan, 80 people were left homeless after one destroyed an apartment building in July 2018.

In Michigan’s rural northeast corner, the Huron Undercover Narcotics Team routinely finds hash-oil equipment when it raids illegal growing operations, Detective Lieutenant Stuart Sharp said.

“The more people growing marijuana, the more people are going to experiment with this kind of thing and the more explosions and deaths we’re going to see,” he said.

SEARCHING FOR SOLUTIONS

Public-safety officials interviewed by Reuters say sales restrictions on butane could limit explosions from makeshift hash oil labs, just as limits on chemicals used in methamphetamine production have helped to curtail domestic production of that drug.

The California legislature voted for statewide limits in 2017, but then-Gov. Jerry Brown vetoed the measure, saying the legitimate hash-oil industry should be given a chance to comply with impending regulations.

Since recreational marijuana sales became legal in 2018, the state has licensed 154 businesses to use butane or other explosive solvents to produce marijuana concentrates. Licensed businesses pay fees of up to $75,000 per year and must use equipment that keeps solvents contained. They must pass a fire-code inspection and train employees on safety standards.

The risk remains. California regulators fined a licensed producer $50,000 in December 2018 after a propane explosion badly burned a worker.

Chris Witherell, an industry consultant, says most of the hundreds of hash-oil operations he has inspected don’t pass the first time he visits. “Equipment is often poorly assembled or operating with incorrect parts,” he said.

Flowers said the DEA has dismantled 18 illegal hash-oil labs in San Diego this year, putting it on pace to nearly double the number in 2018.

“I’m extremely concerned about what the next six months are going to hold,” she said.

(Editing by Kieran Murray and Julie Marquis)

Shady triangle: Southeast Asia’s illegal oil and fuel market

A bird's-eye view of ships along the coast in Singapore July 9, 2017.

By Henning Gloystein and John Geddie

SINGAPORE (Reuters) – An alleged oil heist in Singapore that has already led to 20 arrests, the seizure of at least one tanker and allegations that thieves siphoned thousands of tonnes (1 tonne is approx. 2, 204.6 pounds) of fuel from Shell’s biggest refinery is shining a spotlight on an illegal trade worth tens of billions of dollars worldwide.

Working routes in a triangle of sea anchored by Thailand, Vietnam and Singapore and encompassing the oil facilities of Malaysia, the smugglers take advantage of a difficult-to-patrol sea and enticing black market prices, experts say.

The suspects in the latest case are accused of stealing oil from Royal Dutch Shell’s Pulau Bukom refinery, often during business hours, and distributing it around the region.

Several of the men charged worked for Shell. Employees of a major Singaporean fuel trading company and a London-listed business that inspects and certifies cargos have also been charged.

“Siphoning off fuel is a common thing in Southeast Asia. There is a huge black market for it,” said Ben Stewart, commercial manager of the shipping security firm Maritime Asset Security and Training, which has helped authorities in the region fight fuel theft and smuggling.

Singapore is by far the world’s biggest ship refueling port, and Southeast Asia’s petroleum refining hub. Hundreds of vessels pass through the small city-state’s waters every day.

Security officers say the sheer amount of traffic makes checking every ship impossible, opening the door to illegal trade.

In most cases, oil is discreetly siphoned from legal storage tanks and sold into the black market. But there have also been thefts at sea and even hijackings of entire ships to steal their fuel.

Data from the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), based in Singapore, shows more than half of the serious shipping incidents reported in the past year have occurred off the east coast of the Malaysian peninsula.

Some officials put the value of the illegal trade in Southeast Asia at $2 billion to $3 billion per year. But Yousuf Malik, principal at security consultancy Defence IQ, estimated about 3 percent of Southeast Asia’s consumed fuel is sourced illegally, worth $10 billion a year.

“The scale of the illegal oil trade varies with oil prices – when oil prices are high, so is the level of smuggling,” said Praipol Koomsup, former Thai vice minister of energy and professor at Thammasat University.

Crude oil prices have risen by more than 50 percent since mid-2017 to about $70 per barrel, the highest level in over three years. That increases the black market demand in poorer Southeast Asian countries, including Vietnam and Thailand.

“Smuggled oil has been known to be sold to factories for industrial use, or unnamed roadside oil stations. Regular citizens and fishermen are involved in the smuggling,” Koomsup said.

OPEN SEA FUEL STATIONS

Several fuel traders told Reuters that the illegal sale of fuel is common enough that companies plan for losses of 0.2-0.4 percent of ordered cargo volumes.

Stewart said one common method of theft involves a simple fudging of paperwork at sea: captains overstate how much fuel their ship is using, then sell the excess.

Sometimes entire ships are captured for their fuel cargo.

When fuel is stolen on such a large scale, it tends to be transferred to other ships at sea.

Legal ship-to-ship transfers frequently happen between oil tankers in registered zones. In the South China Sea, however, illegal traders use purpose-built ships – with some even disguised as fishing trawlers – to take in and distribute fuel.

According to ReCAAP, the waters around the remote Natuna Islands, which sit between peninsular Malaysia and Borneo but belong to Indonesia, are a hot spot for piracy and illegal fuel transfers.

The Atlantic Council, a policy research group, said many of the region’s illegal fuel operations had links to organized crime.

Police in Thailand and Vietnam said most illegal fuel comes into the country by sea, usually transported on mid-size trawlers in unmarked drums. Smaller vessels then bring the fuel ashore for sale on the street.

“The coasts of Thailand and Vietnam are vast, and its cities big. To catch or even trace the illegal fuel in this area is virtually impossible. That’s why it happens,” said one security source, speaking on the condition of anonymity as he was not cleared to talk to media about contraband operations.

THE BUKOM HEIST

Bukom, just south of Singapore, is an island serving just one purpose: 1.5 square kilometers (0.6 square miles) of tropical land devoted to the biggest petroleum refinery owned by Anglo-Dutch Shell. It can process 500,000 barrels of crude oil per day.

As global markets were gearing up for a new year in early January, Singapore authorities conducted coordinated raids across the city-state, arresting 20, charging 14 Singaporean and Vietnamese men, and seizing millions of dollars in cash. They even confiscated an oil tanker.

At the heart of the police operations is Bukom, where suspects, including current and former Shell employees, are accused of stealing oil worth millions of dollars in the past six months.

Singapore’s biggest marine fuel supplier, Sentek, last weekend saw its marketing and operations manager, as well as a cargo officer, charged in connection with the case.

Another person charged works for Intertek in Singapore, a British-listed company specializing in quality and quantity assurance, including for fuel products.

In a statement to Reuters, Shell said, “Fuel theft is an industry problem globally and not something that anyone can solve on their own.” The company added that it was working with governments and ReCAAP to address the issue.

A representative for Intertek was not immediately available for comment. Sentek declined to comment.

A lawyer representing one of the accused men said he had not yet had opportunity to obtain instructions from his client. Lawyers for some of the others charged were not immediately available for comment.

The Prime South, the small 12,000-tonne Vietnamese tanker police seized, frequently shipped fuel between Singapore and Ho Chi Minh City. The ship had also recently made stops at Rayong, Thailand.

Between ports, the tanker often switched off its transponder, which every merchant vessel is required to carry.

The scale of the theft was big enough that Shell did not think it could handle the case internally. Instead, in August the company contacted authorities, triggering one of the biggest police operations in Singapore in years.

Police investigations are ongoing. The charges in court documents allege the suspects in the Singapore case stole over $5 million worth of oil.

Globally, oil theft could be worth as much as $133 billion, said Malik of Defence IQ.

“Its sheer scale and the flows of illicit cash related to oil and fuel theft and smuggling exacts a toll on virtually every aspect of the economy,” Malik said.

(Reporting by Henning Gloystein and John Geddie in SINGAPORE; Additional reporting by Chayut Setboonsarng and Panu Wongcha-Um in BANGKOK, Mai Nguyen and James Pearson in HANOI, and Fathin Ungku and Roslan Khasawneh in SINGAPORE; Editing by Gerry Doyle)

Venezuela citizens scramble to survive as merchants demand dollars

Bolivar notes a seen hanging in a tree at a street in Maracaibo, Venezuela November 11, 2017.

By Eyanir Chinea and Maria Ramirez

CARACAS/CIUDAD GUAYANA, Venezuela (Reuters) – There was no way Jose Ramon Garcia, a food transporter in Venezuela, could afford new tires for his van at $350 each.

Whether he opted to pay in U.S. currency or in the devalued local bolivar currency at the equivalent black market price, Garcia would have had to save up for years.

Though used to expensive repairs, this one was too much and put him out of business. “Repairs cost an arm and a leg in Venezuela,” said the now-unemployed 42-year-old Garcia, who has a wife and two children to support in the southern city of Guayana.

“There’s no point keeping bolivars.”

For a decade and a half, strict exchange controls have severely limited access to dollars. A black market in hard currency has spread in response, and as once-sky-high oil revenue runs dry, Venezuela’s economy is in free-fall.

The practice adopted by gourmet and design stores in Caracas over the last couple of years to charge in dollars to a select group of expatriates or Venezuelans with access to greenbacks is fast spreading.

Food sellers, dental and medical clinics, and others are starting to charge in dollars or their black market equivalent – putting many basic goods and services out of reach for a large number of Venezuelans.

According to the opposition-led National Assembly, November’s rise in prices topped academics’ traditional benchmark for hyperinflation of more than 50 percent a month – and could end the year at 2,000 percent. The government has not published inflation data for more than a year.

“I can’t think in bolivars anymore, because you have to give a different price every hour,” said Yoselin Aguirre, 27, who makes and sells jewelry in the Paraguana peninsula and has recently pegged prices to the dollar. “To survive, you have to dollarize.”

The socialist government of the late president Hugo Chavez in 2003 brought in the strict controls in order to curb capital flight, as the wealthy sought to move money out of Venezuela after a coup attempt and major oil strike the previous year.

Oil revenue was initially able to bolster artificial exchange rates, though the black market grew and now is becoming unmanageable for the government.

TRIM THE TREE WITH BOLIVARS

President Nicolas Maduro has maintained his predecessor’s policies on capital controls. Yet, the spread between the strongest official rate, of some 10 bolivars per dollar, and the black market rate, of around 110,000 per dollar, is now huge.

While sellers see a shift to hard currency as necessary, buyers sometimes blame them for speculating.

Rafael Vetencourt, 55, a steel worker in Ciudad Guayana, needed a prostate operation priced at $250.

“We don’t earn in dollars. It’s abusive to charge in dollars!” said Vetencourt, who had to decimate his savings to pay for the surgery.

In just one year, Venezuela’s currency has weakened 97.5 per cent against the greenback, meaning $1,000 of local currency purchased then would be worth just $25 now.

Maduro blames black market rate-publishing websites such as DolarToday for inflating the numbers, part of an “economic war” he says is designed by the opposition and Washington to topple him.

On Venezuela’s borders with Brazil and Colombia, the prices of imported oil, eggs and wheat flour vary daily in line with the black market price for bolivars.

In an upscale Caracas market, cheese-filled arepas, the traditional breakfast made with corn flour, increased 65 percent in price in just two weeks, according to tracking by Reuters reporters. In the same period, a kilogram of ham jumped a whopping 171 percent.

The runaway prices have dampened Christmas celebrations, which this season were characterized by shortages of pine trees and toys, as well as meat, chicken and cornmeal for the preparation of typical dishes.

In one grim festive joke, a Christmas tree in Maracaibo, the country’s oil capital and second city, was decorated with virtually worthless low-denomination bolivar bills.

Most Venezuelans, earning just $5 a month at the black market rate, are nowhere near being able to save hard currency.

“How do I do it? I earn in bolivars and have no way to buy foreign currency,” said Cristina Centeno, a 31-year-old teacher who, like many, was seeking remote work online before Christmas in order to bring in some hard currency.

(Additional reporting by Andreina Aponte and Leon Wietfeld in Caracas, Mircely Guanipa in Maracay, Anggy Polanco in San Cristobal, Lenin Danieri in Maracaibo; Writing by Girish Gupta; Editing by Leslie Adler)

China jails two over vaccine scandal

BEIJING (Reuters) – A court in China on Tuesday jailed two people for selling vaccines without a license, state media said, after a scandal last year that sparked public anger.

The case, involving possibly as much as $90 million of illegal trades of vaccines through a black market drugs ring, underscored regulatory weaknesses in the world’s second largest pharmaceuticals market.

The court in Jinan city sentenced Pang Hongwei to 15 years in prison for illegally purchasing vaccines, including rabies vaccines, which she stored in warehouses in Jinan and another city, before selling them around China, Xinhua news agency said.

Pang improperly stored the vaccines she bought, and earned nearly 75 million yuan ($10.93 million) from selling them, Xinhua added.

She was also given another six years for a previous accusation of illegally trading vaccines, and so will serve a total of 19 years, the news agency said.

Pang’s daughter, Sun Qi, was sentenced to six years in prison for assisting her mother, Xinhua added.

It was not possible to reach legal representatives of either of them for comment.

The vaccines, including ones against meningitis and other illnesses, are suspected of being sold in dozens of provinces around China since 2011.

The government has said it has not found any spike in abnormal reactions to inoculations and that the vaccines themselves were real, though traded illegally and improperly stored.

($1 = 6.8588 Chinese yuan renminbi)

(Reporting by Ben Blanchard; Editing by Robert Birsel)

Rising prices mar prospects of economic revival in Egypt

Egyptian baker in Cairo

By Mohamed Abdellah

CAIRO (Reuters) – Egypt’s efforts to relieve a crippling dollar shortage are pushing it towards a sickly combination of rising prices and lower growth, undermining hopes for economic revival after years of political upheaval.

Prices have soared since Egypt devalued its currency by 13 percent in mid-March to end speculation against the pound and ease a dollar shortage that has disrupted trade in a country that relies on imports of everything from food to fuel.

But the black market for dollars has since rebounded, putting Egypt back at square one: under pressure to devalue and spark a new round of price rises just as economic growth slows.

Affordable food is an explosive political issue in Egypt, where tens of millions live a paycheck from hunger and economic discontent has helped unseat two presidents in five years.

Living in a slum built on an abandoned refuse dump in Cairo, Mahmoud Abdallah describes the daily battle to make his family’s income stretch beyond beans and potatoes as core inflation hit a seven-year high above 12 percent in May.

“Fruit? What fruit?” the father of six asks with a bitter laugh. “It’s enough for us to look at fruit in the street.”

Importers say devaluation has made shipments more costly, while the hard currency shortage forces some to pay a premium on the black market where one dollar sells for about 11 pounds. The official rate is 8.8, but banks cannot meet demand.

In an effort to cut imports it blames for excessive dollar demand, Egypt increased customs duties this year. The idea is to nudge consumers toward locally-made substitutes, boosting Egyptian firms and encouraging exports.

But exports fell 13.9 percent in the first half of 2015-16, with manufacturers saying the dollar shortage made it harder to import raw materials. The devaluation means they pay more for those inputs too, so local produce is also more expensive.

“They want to make it more difficult to import things but they are also effectively risking engineering a recession,” said Timothy Kaldas, non-resident fellow at the Tahrir Institute for Middle East Policy. “I don’t envy anyone having to deal with this situation because there are no good solutions.”

Abdallah has struggled to find regular work since the 2011 revolt that ended Hosni Mubarak’s 30-year rule and was propelled, in part, by anger over economic policies that appeared to benefit the rich and leave everyone else behind.

“The situation is below zero… Every time prices rise, we fall, others fall… the poor are lost,” he told Reuters.

CALLING IN THE ARMY

The dangers are not lost on President Abdel Fattah al-Sisi, who promised to revive the economy after taking power in 2013 and has called in the army to help keep a lid on prices.

Over the past year, army vans have begun roaming the country selling cheap groceries and military outlets have popped up.

“Air Defence Outlet. No to Higher Prices. No to Greedy Merchants,” reads a sign above one such store in Cairo.

Through its barred window, customers call out their orders.

The colonel who manages the shop says the goods are made by military companies primarily to feed troops, but are being sold to consumers to combat price rises he blamed on merchants.

But business people say they cannot offer the same prices as the military, which is exempt from tax and uses conscripts as free labor in its factories and farms.

By offering subsidized goods they cannot compete with, economists say the state is undermining the private sector and increasing reliance on subsidies the state cannot afford and should be scaling back.

“Look at the rise in the price of oil, butter and vegetables and you’ll know why we raised prices,” said Mohamed Abdel Rahman, a bakery owner.

COMPETING FOR CUSTOMERS

At a wagon selling cheap cuts of meat at an open food market in Cairo, a woman buys a bag of cow intestines. Another asks the price of a shin and walks away on hearing the answer.

At another stall, women pick through a pile of rotten tomatoes selling at a discount. A fresher batch, at twice the price, sits untouched.

The month of Ramadan, when Muslims fast from dawn to dusk, is normally busy for food-sellers as families gather for the evening meal. This year, it is more subdued.

“We used to wait for this season,” said a butcher, who declined to give his name. “This was the season when people bought quantities and varieties. Now they just look and leave.”

As people cut back on spending, the slowdown could gather pace, say economists, spelling trouble for a government that needs faster growth to create jobs for a growing population.

Growth slowed to 4.5 percent in the first half of 2015-16 from 5.5 percent a year earlier, robust by Western standards but too slow, say experts, for a population that expanded by 1 million, to 91 million, in the last six months.

Yet rising inflation forced Egypt to hike interest rates by 1 percentage point last week to their highest levels in years.

That makes borrowing, and expansion, more expensive for private sector firms in a country where banks already prefer to invest in high-yield, low-risk government debt.

A plan to introduce Value Added Tax is in the works but has been delayed as policymakers fret over the political repercussions of another round of inflation.

The past two years have already seen the government slash electricity and petrol subsidies, though further cuts were delayed due to declining oil prices. In recent weeks, Egypt has raised price caps on the cheapest generic medicines.

The prospect of more price rises is a nightmare even for middle class Egyptians like civil servant Shadia Abdallah, whose husband is retired and two grown-up sons live at home.

“Our income is fixed but prices are rising,” she says.

ISIS Killing Doctors For Not Harvesting Body Parts

Iraq’s ambassador to the United Nations is calling for the world body to investigate reports that ISIS is killing doctors who will not harvest organs for sale on the black market.

Ambassador Mohamed Alhakim said that dozens of bodies have been found in shallow graves with surgical incisions.  Examinations of the bodies show that organs like the kidneys, livers and hearts missing.

“Surgeries take place within a hospital and organs are quickly transported through networks specialized in trafficking human organs. Mosuli said that the organs come from fallen fighters who were quickly transported to the hospital, injured people who were abandoned or individuals who were kidnapped,” a report printed by the London Daily Mail read.

Alhakim said they have confirmed reports of a dozen doctors being killed in Mosul for refusing to take organs from dying people.  He said that the group is using the tactic more to offset losses in exports of oil from seized drilling rigs.

The UN’s envoy to Iraq, Nikolay Miadenov, confirmed some of the ambassador’s claim sand said that 790 people have been confirmed dead from terrorism at the hands of ISIS.

ISIS Selling Church Artifacts On Black Market

A British publication has conducted an undercover investigation that shows terrorist group ISIS is selling artifacts from Christian churches on the black market as a way to fund their actions.

Oliver Moody of The Times published an article showing ISIS taking antiquities worth millions of dollars and selling them to western buyers.

“Willy Bruggeman, a former deputy director of Europol who is now president of the Belgian federal police council, said that some of the artefacts had almost certainly been sold illegally to buyers in the UK, although none had yet been traced to Britain,” Moody wrote.

“Iraqi Intelligence Service confirmed earlier this year that ISIS was able to collect 23 million pounds from the sale of artifacts from the Syrian city of Nabaq, which is full with Christian Collectibles.”

In addition to selling the artifacts, the group has been using a bulldozer to destroy Christian churches so they can sell the gypsum inside the walls.

The United Nations has stated in multiple hearings that the cultural heritage of Iraq is in danger from the terrorist group.