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According to Robert Todd Carrolls the Skeptics Dictionary, the term is a bit misleading, since the aromas of oils, whether natural or synthetic, are generally not themselves therapeutic. Carroll adds that aromas are used to identify the oils, to determine adulteration, and to stir the memory, but not to directly bring about a cure or healing.
It is the ‘Essence’ of the oil–its chemical properties–that gives it whatever therapeutic value the oil might have. Furthermore, vapors are used in some but not all cases of aromatherapy. In most cases, the oil is rubbed onto the skin or ingested in a tea or other liquid. Some aromatherapists even consider cooking with herbs a type of aromatherapy.
Over at QuackWatch.org, Stephen Barrett, M.D., has researched these claims aromatherapy. He has studied into is Aroma Vera, Inc., of Los Angeles, which states that essential oils have the power to purify the air we breathe while they relax, stimulate, soothe or sharpen our senses… a wonderful antidote to the air pollution and scentsory imbalance of modern life. It also claims that inhaling the scents balances the biological background, revitalizes the cells, and produces a strong energizing effect on the sympathetic nervous system.