The price of oil has slipped some over the last few days, but it’s projected to soar even higher – what will it mean for its exchange traded funds (ETFs)?

The reports on fuel got more dismal this morning, as many wonder just how much worse it’s going to get. According to an energy report from the Canadian Imperial Bank of Commerce today, oil could hit $225 a barrel by 2012.

Cars are blamed for the continually rising prices: 90% of the demand growth in the last few years has gone to transportation. Car sales globally soared last year, growing 60% in Russia, 30% in Brazil, 20% in China. Sales were flat in Europe and dropped in the United States.

Meanwhile, the oil ETF isn’t the only one performing. Steel and natural gas are nothing to turn up one’s nose at, either. Gary Gordon for ETF Expert reports that funds for both of the commodities have at least kept pace with United States Oil (USO), if not leaving it in the dust.

In the last month, USO is up 18.6%. Year-to-date, it’s up 25.6%. Not too shabby.

United States Natural Gas (UNG) is blowing right past oil, though: it’s up 20% in the last month, and 45.2% year-to-date. Market Vectors Steel (SLX) is keeping up: it’s up 17.9% in the last month and 17.6% year-to-date.

The question on everyone’s minds is whether the U.S. slowdown will eventually catch up to the global markets and put the brakes on demand for these commodities. Gordon says it’s possible for some commodities, but he doesn’t see steel demand slowing. In China, the number of steel factories has doubled in the last five years.

Global demand for natural gas is also high, but the supplies are plentiful. That begs the question: why has the price been rising? It all traces back to the price of crude oil; it’s so expensive that natural gas is one of the alternatives under consideration. It’s the cleanest burning carbon-based fuel (unlike coal), and cars powered by natural gas are getting attention from major car makers such as Honda.

Do you find it daunting to focus on a single commodity? Another option is picking a fund diversified over several commodities, such as the Dow Jones Total Commodity Index ETN (DJP) or the iShares S&P GSCI Commodity-Indexed Trust (GSG), which is allocated about 67% in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock, and 3% in precious metals.

Tags: Asia, Brazil, China, Coal, Commodity ETFs, Eastern Europe, Emerging Markets, Energy, ETNs, Europe, Latin America, Material ETFs, Metals, Natural Gas, Russia, Steel, UNG, USO