Interesting article in SciAm about the difficulty in treating head lice infestations. "Overexposure to insecticides has bred resistance in the parasites, making it harder than ever to treat infestation." The situation is different in Europe, where they've stopped using insecticides to kill lice and nits and use synthetic oils:

Further confounding matters, the co-pay for visiting a doctor, plus the cost of prescriptions, which may or may not be covered by insurance, can impede patient access to these newer medications. And despite their diminishing efficacy, over-the-counter lice shampoos remain the first response recommended by most doctors, health plans and even the American Academy of Pediatrics. For its part, the combing method used by many parents and professional lice pickers such as LiceDoctors is theoretically effective, Clark and Yoon note, but hard to do well.

The situation is totally different in Europe, where treatment moved on from pyrethroids and virtually all insecticides about a decade ago, says Ian Burgess, president of the International Society of Phthirapterists (people who study lice). Instead most Europeans now rely on silicone and other synthetic oils to eliminate head lice. The oils envelop the lice, preventing them from excreting water. As liquid builds up inside the louse, its internal organs start to shut down from the exhaustion of trying to pump out the water. Either it dies of this exhaustion, Burgess says, or its guts rupture from the liquid.