Winter is coming, but higher prices for natural gas are already here. And if you’re hoping that Texas shale drillers will blunt the current price surges by boosting production, forget it. Wall Street would prefer they stay on the sidelines.

The stock of Diamondback Energy, a major driller in the Permian Basin, has jumped more than 18 percent this month alone while shares of Fort Worth-based Range Resources, one of the biggest producers in Pennsylvania’s Marcellus Shale, have nearly tripled this year. In part that’s because prices are on a tear. Natural gas futures jumped 17 percent in September alone, and they’ve doubled in the past six months to more than $5 per million BTUs. The last time prices were this high was 2014. Back then, production surged right along with prices. But not now.   

For most of the past year and a half, the number of working natural gas rigs in the U.S. has remained at fewer than one hundred. That’s the fewest since 2016, and it represents just 33 percent of the number of rigs capturing gas in 2014.

That contraction in production capacity is mostly intentional (although Hurricane Ida and other extreme weather events also had an impact). In mid-September Diamondback said it would spend $2 billion to buy its own stock rather than expand its drilling operations and boost production to capitalize on the higher prices. It also pledged to return 50 percent of its free cash flow to investors (although it didn’t specify how) and use the rest to reduce debt. The company boasted about its “continued strong operational performance and improved capital efficiency.”

Diamondback isn’t alone. “Capital efficiency,” “maximizing shareholder value,” “living within cash flow,” and other clichés of financial discipline have become the new rallying cry for an oil patch chastened by overproduction that began in 2016. “More drilling equals growth, which is what got the industry into a pickle in the first place,” said Dan Pickering, founder and chief investment officer for Houston-based Pickering Energy Partners.

After the 2008 financial crisis, the fracking boom led to a gas glut and a corresponding dip in prices. Production companies were churning through capital, which was readily available from banks and private equity investors. In 2008, before the fracking boom, U.S. oil and gas production had fallen to 5 million barrels a day. By 2019, it more than doubled, hitting a record in excess of 12 million barrels. But with so much supply, average oil prices mostly stayed under $60 a barrel while gas hovered in the $2 to $3 range that year. Those low prices meant the boom didn’t translate into shareholder returns. That, Pickering said, “tanked the industry.”

Wary of that happening again, natural gas producers are now courting investors with promises of better returns and more restraint. Even amid the current spike in prices, shale production is down from pre-pandemic levels. Indeed, these days, the “drill, baby, drill” sentiment is as out of place in the oil patch as a Hillary Clinton bumper sticker. “The investor mind-set is now one of distrust and ‘give me back the money,’” Pickering said. “It will take a relatively long period of higher prices, combined with capital discipline, for investors to trust the sector again.” That trust probably won’t return before at least 2023, and only then if the industry maintains its newfound restraint, Pickering said.

The pandemic has provided even more reason for the industry to be cautious. When people began quarantining at home, working remotely, and driving far less, the industry felt the effects. That left an indelible mark on producers. Take Diamondback. In 2020, its production rose 8 percent, but weak demand meant it got lower prices for its oil and gas, and it lost $4.7 billion for the year compared with a $315 million profit in 2019. Some fared far worse. More than one hundred oil and gas companies have filed for bankruptcy since the pandemic started.

But the restraint the industry has shown amid those troubles comes at a price for natural gas supplies, and that could mean higher prices for gas buyers for months to come. Prices typically rise in the fall as utilities buy gas and store it in preparation for increased demand for heat in the winter. But today’s gas storage supplies are 16 percent lower than at the same time last year because of the dearth of new drilling and because of higher demand from manufacturing and chemical plants, which use gas for fuel and as a raw material for plastics, fertilizer, and other products. So even before cold weather arrives, prices are already elevated. That likely means they’ll continue to rise throughout the winter.

It could spell bad news for Texans’ heating bills this winter. Goldman Sachs predicts prices could double from their current heights, hitting $10 per million BTUs. How that will translate into heating bills depends on who you’re buying gas from and how your plan is structured, but know this: When prices quadruple, utilities will pay much more and so will you. Maybe a lot more.

Part of the blame for that rests with oil, which overshadows the gas market. Like shale gas companies, oil producers too are keeping their drill pipes in the yard. The break-even price for new wells is somewhere between $45 and $50 a barrel in places like the Permian, well below the $60 to $70 a barrel that West Texas Intermediate crude has fetched for most of the year. Less oil drilling also means less natural gas production because gas is often a byproduct of oil production. It’s known as associated gas in industry parlance. “The supply of associated gas is down, especially in the Permian,” said Ed Hirs, a University of Houston energy fellow and a lecturer on energy economics. OPEC, he said, has geared its production quotas to keep oil in the $70 a barrel range. If those prices hold, “we can expect more associated gas returning to the market.”

Even so, the question hovering over the oil patch is the same one that always accompanies surging prices: Will they last? It doesn’t take much change in supply to influence prices. Even a few more rigs firing up this fall could reverse this year’s rise in prices. And let’s not forget what industry we’re talking about: one that has long valorized wildcatters and other risk takers. Financial discipline may be the flavor of the month, but sooner or later, the lure of higher prices could cause some companies—or maybe many—to break ranks and start drilling.

Pickering believes the first signs of renewed drilling to come from private producers who don’t have to answer to shareholders and are more likely to funnel profits from this year’s increased prices into new drilling programs. He predicts rig counts will begin ticking up, with the first signs in gas-heavy plays such as the Eagle Ford Shale of South Texas and the Haynesville Shale in East Texas, northwest Louisiana and southwestern Arkansas. “I’m sure some of the gas-focused companies are drilling now,” Hirs said. “[But] it will be some time before those wells come online.” Once they do, the current pressure on prices may finally be released.