(Second, if there is a big bolus of inflation, that could change, so I'm using 2005 dollars as a reference.)

(Third, my prediction includes an estimated 12.5% inflation along with the demand increase in China, but a demand slowing in the US as we slide into recession.)

1. Highest price in 2006: October (of course) due to Hurricanes.  $84 (in 2005 dollars).  Accounting for 12.5% inflation (2005->2006), this could be nearly as high as $100 ($97.87), but I'm predicting it stays below $100.

1a.  Should it hit $100, both options on the CALL and PUT side will have a profound effect upon prices so you might see it BOUNCE off $100 before driving right through.

1b.  It won't stay above that point for long, again because of the unwinding of the options.  A lot of money will change hands, but we'll end up below that.  (In essence, crossing $100 will be because someone is trying to manipulate the market and make money on options.)

2. Year-end 2006: $91 (in 2006 dollars, or about $81 in 2005 dollars).

3. Natgas BOE $115 (2006 dollars)

4. $100/bl reached in August (AUGUST) 2007 at the first sign of a hurricane headed for the Gulf. (in 2007 dollars)

• Inflation is real and present.  Whether they measure it or not.  The lack of an M3 published measure is disturbing and makes me wonder about the wording of the FED's governers' statements.  

• I expect a deep recession in 2007 -- so deep that some guys in China will be jumping out of buildings because they're too leveraged.  Not to the point of a depression, but a 1987-style correction.