When Goldman analysts wrote the report late in March, New York oil futures were trading just above $50 per barrel. This month, they surged to a new record over $67, up 60 percent this year and more than double the price traded two years ago.

The galloping prices have forced governments to cut fuel subsidies in a bid to shield their budgets, boosted costs for businesses and raised questions that many were hoping would not have to be posed: Can Asia sustain its growth with oil at $70?

And can Asian consumers, with incomes a fraction of those in the developed world, afford items such as cars, air-conditioners and washing machines when fuel costs rise and central banks are raising interest rates?

"I believe in downward sloped demand curves so I do expect the demand for cars, air-conditioners, etc. to fall with the rise in the price of energy," said Arvind Panagariya, an economics professor at Columbia University and a former chief economist at the Asian Development Bank.

Higher incomes would offset this to some extent, but in the near term Panagariya concluded Asia is either going to see larger fiscal deficits -- if government keep subsidising energy costs -- or consumers have to prepare for even higher energy prices.