The money you are saving at the pump this holiday season is probably only temporary

• Goldman Sachs researchers are projecting oil prices to jump nearly 20% next year.
• They cite continued high demand coupled with a tightening of supply in 2024.
• Supply was boosted by the US this year, but that is expected to fade moving forward. 

As the holiday season approaches, drivers are experiencing a welcome respite at gas stations, but those savings will likely go away in the new year.

A new note from Goldman Sachs oil researchers last week projects that oil prices will jump 18% from their current levels of $78 per barrel to an average of $92 per barrel in 2024, with the reasoning coming down to basic supply and demand. The researchers noted that demand has been strong and will remain so in 2024, but supply is expected to fall next year, especially in non-OPEC producing countries like the US.

Last week, West Texas Intermediate crude, a benchmark for oil prices, dipped to approximately $73 per barrel, a significant 20% drop from its late September peak of $94. This decline was mirrored in gas prices, with the national average hovering around $3.30 per gallon, according to AAA, a notable decrease from the near $4 mark in early October.

This reduction is expected to have a significant impact on Thanksgiving travel plans. According to a survey this month by GasBuddy, 41% of respondents are planning road trips for this year's holiday, an 8% increase from 2022. This surge in travel is boosted by the lowering of gas prices, which is expected to save Americans nearly $1.2 billion compared to last year, according to GasBuddy.

Pain at the pump is coming

While lower gas prices will help Americans during the busy — and often costly — holiday seasons, the pain at the pump will likely return as we move into the new year.

While the Goldman Sachs researchers said concerns about decreasing demand moving forward have helped push prices lower, they expect demand to remain high in 2024 and possibly increase — as projected by OPEC.

Meanwhile, the researchers project supply from OPEC countries to remain steady or even drop to stay within its target of $80 to $100 per barrel.

"We think OPEC will be responsive and keep supply lower for longer, and if necessary, cut more," Daan Struyven, head of oil research at Goldman Sachs, said during an interview with CNBC's "Squawk Box."

But more importantly, the researchers referred to the increased production seen in non-OPEC countries, including the record levels seen in the US this year, as a "one-time boost" to supply due to overcoming post-pandemic supply constraints on things like oil rigs and workers.

"The big surprise of 2023 is stronger than expected non-OPEC supply growth, which we think will slow heading into 2024," Struyven said.

Not helping matters is that the US Strategic Petroleum Reserve (SPR) is near a 40-year low. The Biden administration unloaded 180 million barrels last year to help counter the price surge following the Russian invasion of Ukraine. With fewer barrels in reserve — near 40-year lows of about 350 million and about half the peak seen in the early 2010s — there's now less oil that the US can release into the economy and help increase supply and thus lower prices.

Now, the US wants to refill the Strategic Petroleum Reserve, and if the US fills the reserve too quickly, it will have a big impact on lowering the available oil supply and prices will likely go up even higher.

Interestingly, the disruption in supply has not been seen this year in the areas where many had expected — the Ukraine war and Israel's war with Hamas.

"One of the remarkable features this year is that the level of supply disruption has been remarkably low despite the fact that we are living in a highly uncertain geopolitical backdrop," Struyven said.

Of course, not everybody is projecting a drop in supply. David Kelly, the chief global strategist for JP Morgan Asset Management, thinks supply from the US will actually increase next year.

"We're currently producing more crude oil than either Russia or Saudi Arabia," Kelly said on CNN's "Before the Bell" in September. "This is going to be a record year for US liquid-fuel production, and next year is going to be even stronger. The global economy is growing slowly, and that's going to limit demand growth for fossil-fuel energy. And frankly, the green-energy transition is also limiting the growth in demand."

What Americans pay at the pump is always at the forefront of their economic considerations, as it often determines how much money they have to spend elsewhere. And what the US economy doesn't need in the near future is Americans tightening their budgets after their summer of fun and the holiday spending season.