It was another bad week for Shell (LSE:SHEL) share price. FTSE 100 Shares of the oil and gas giant are down another 6.15% this week and are up just 2.28% over the past year.

That says little about Shell itself, but a lot about the global economy. A barrel of Brent crude oil cost $90 a year ago. Since then, it has fallen 21% to just $71, a 15-month low. You could say that Shell is doing quite well under the circumstances.

This continues to generate gigantic profits, and should continue to do so even if energy prices continue to fall, by investing in modern oil fields that can be profitable even at $30 a barrel.

Will Shell be able to thrive as oil prices fall?

This not only gives Shell a safety net. It also means that when the oil price eventually rises, margins will widen nicely. This is a cyclical sector and in my opinion it is always better to invest at the bottom of the cycle than at the top.

That doesn’t mean we’re at rock bottom, though. Oil could continue to fall. Axel Rudolph, senior technical analyst at online trading platform IG, says there are a number of things working against him, including “A lot of supply, OPEC+ is pushing for higher production quotas, and the world’s largest oil-importing economy, China, looks sluggish”.

On top of that, the United States is facing a potential recession, and the transition to net zero emissions is a long-term challenge.

Fawad Razaqzada, a market analyst at City Index, is also bleak. He warns that today’s “the supply glut will have to be resolved by either a reduction in oil production or a sudden surge in global economic activity. Neither of these scenarios seems likely or inevitable”.

Shell’s valuation reflects this view, with the stock trading at just 8.08 times earnings. That’s well below today’s FTSE 100 average of around 15 times.

Underperforming stocks

Adjusted second-quarter earnings for the three months to June 30 fell 19% to $6.3 billion, although they beat estimates of $5.9 billion. Still, management could afford to reward investors by launching a $3.5 billion share buyback, payable over three months.

I wish they put more effort into the dividend, given today’s average trailing yield of 3.9%. There’s room for improvement here, as it’s comfortably covered by 3.2 times earnings. The projected yield is 4.2%. And to be fair, management has been pretty progressive.

After changing the basis for the full-year dividend per share to $0.65 during the pandemic in 2020, the company increased payouts to 89 cents in 2021, $1.04 in 2022 and $1.29 in 2023. Management now intends to escalate dividends by approximately 4% annually, with an additional goal of repurchasing shares.

Buying Shell stock today would give me access to a steadily growing income stream at a discount. I could wait until it gets even cheaper, but timing the market is never effortless. A bit of positive data could send a rocket under Shell.

I want to buy Shell and I will as soon as I have the cash, with a November 14 deadline when the stock goes ex-dividend again. I want that income!