(Bloomberg) — The e-mail’s subject line jumps right out at you: “Anyone Willing to Forecast $200 Oil?” The report by Action Economics LLC explores the worst-case scenario for energy markets in the years ahead.

On whether the price of a barrel of crude oil will go that far, Action Economics Chief Economist Mike Englund is quite right when he says “we suspect it’s well beyond the willingness of most oil analysts to reasonably project.”

Perhaps not in the near future, but thanks to economic trends in Asia, can $200 per-barrel crude oil really be ruled out? No, says Marc Faber. One of Asia’s best-known contrarians, the Hong Kong-based head of Marc Faber Limited has been managing money in this region for more than 20 years — $300 million at the moment. He publishes a monthly newsletter called “The Gloom, Boom & Doom Report.”

When it comes to oil-price trends, Faber wonders if investors realize just how bad things could get for bond markets.

“The fundamentals, long term, of the oil market are very compelling, extremely compelling,” he explains. “I wouldn’t be surprised to see $100 or $200 (for a barrel of) oil in the next five to 10 years. It’s not a projection. It’s that I wouldn’t be surprised.”

Demographic Trends

It’s a purely connect-the-dots exercise, though demographic trends here in Asia could have a bigger influence on oil than investors may appreciate. With the exception of Brunei, Indonesia and Malaysia, Asians import just about all of their oil. Populations here are surging, incomes are rising and oil consumption has nowhere to go but up.

In China, Faber thinks, “we have a per capita consumption of oil of 1.7 barrels. In America it’s 28 barrels, in South Korea 17 barrels, Japan 17 barrels, in India 0.7 barrels. In Vietnam it’s probably also less than one barrel. So in Asia on the population of 3.6 billion people we consume less oil than the U.S. on a population of 295 million.”

Looking ahead, Faber adds, “I would imagine that in Asia the demand will certainly double by comparison. Say Mexico has a per capita consumption of 7 barrels, Latin America 4.4 barrels. Asia, as I said, it’s anywhere around 1.5 barrels.”

Consumption of oil in Asia may double to 40 million barrels a day from 20 million barrels, Faber says. “The question is, is it six years or 12 years, but the doubling is easy to project,” he says.

Monetary Stimulus

Add to that equation the amount of monetary stimulus currently making its way around the global economy. As Ray Dalio, who manages $38 billion as chief investment officer at Bridgewater Associates Inc. in Westport, Connecticut, puts it: “An abundance of dollars and a shortage of oil is a dangerous combination.”

It’s not just the U.S. Federal Reserve holding short-term interest rates near record lows. There’s no end in sight to the Bank of Japan’s zero-interest-rate policy amid few signs its seven- year bout with deflation is over. It means the central banks of the world’s two biggest economies continue to print lots of money.

That monetary stimulus, along with rising demand, concerns about supply and geopolitical uncertainties, helped fuel a 76 percent surge in oil prices over the last 12 months. Now, those who worried about the economic effects of crude oil at $40 a barrel are wondering about what $60 or $70 a barrel will do to global interest rates and markets.

The Fallout

What all this means for global growth isn’t clear, yet it’s hardly good news for Asia’s oil-import-dependent economies. Asian countries holding down currencies to support exports will increasingly import inflation. That will lead to higher interest rates, rising bond yields and lower consumer spending.

If there’s a silver lining to all this, it’s that oil prices may in fact need to push the $200-a-barrel mark to shoulder check the global economy. For example, the U.S., says Englund of Action Economics in Boulder, Colorado, may be half as dependent on oil as it was in 1970s. “While the recent run-up in prices is indeed significant” it shouldn’t “prove nearly as disruptive as prior oil price shocks even if prices sustained at current levels.”

The bad news, of course, is that Asia’s rising demand for oil may outpace the world’s ability to meet it or find alternative energy sources. If so, $200 oil could just be Asia’s gift to the world in coming years.

Stopping the Rise

Of course, one wonders if economic forces would allow crude oil to approach that level. Prices even half that high would be far too expensive for Asia, rapidly reducing demand. And central banks might raise rates aggressively. If today’s Fed boosted short- term rates to the 20 percent former Chairman Paul Volcker did two decades ago, it would devastate U.S. consumers and, by extension, demand for Asian goods and Asia’s need for more oil.

At the same time, though, it’s hard to argue with demographic trends in Asia and how that will boost oil demand.

To contact the writer of this column:
William Pesek Jr. in Tokyo [email protected]

To contact the editor responsible for this column:
Bill Ahearn in New York [email protected].