Why Shell and the Other Oil Majors Aren't Price Gouging

The energy sector is inherently volatile, with oil prices often fluctuating rapidly and dramatically. Wall Street seems to forget this fact every time the energy sector goes through yet another big price swing. Right now, volatility is high, and so are oil prices, thanks to the geopolitical conflict in the Middle East. It is headline-grabbing news, but it really isn't all that unusual for the energy sector.

However, there's an important political dynamic here that investors need to consider. It is highlighted by U.S. President Donald Trump's recent accusation that oil companies are price gouging, which included a call for a Department of Justice review. Here's what you need to know as you look at companies like Shell (NYSE:SHEL), ExxonMobil (NYSE:XOM), and Chevron (NYSE:CVX) today.

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Gasoline is an everyday necessity

One of the reasons most investors should have some energy exposure in their portfolios is the economic importance of oil and natural gas, and the products derived from them. One of the most important products here is gasoline, which still powers the vast majority of the vehicles on the road. Notably, gasoline prices tend to react very quickly to changes in oil prices. And changing gasoline prices have a very direct impact on consumers' wallets.

For politicians, that can be a big problem when oil prices are rising. Voters don't like paying more at the pump and often take out their ire in the ballot box. To make matters worse, energy companies tend to generate very large profits when oil prices are elevated

For example, Shell's revenues rose 22% in the first half of 2026 compared to the same span in 2025. And its earnings more than doubled, rising from $1.40 per share in the first half of 2025 to $2.94 per share in 2026.

Chevron also got in on the act, with revenues through the first six months of 2026 up 28% over the previous year. Earnings more than doubled, hitting $7.23 per share, up from $3.46 in the first half of 202 ExxonMobil's results were also strong, with first-half revenues up around 22% and earnings rising by roughly 66%, to $5.60 per share.

It is easy to see how consumers and politicians alike might look at the strong results from some of the world's largest energy companies and take umbrage. However, that doesn't mean the companies are price-gouging. Oil and gasoline are commodities, and Shell, Chevron, and Exxon don't control the price; the market does.

Oil downturns upend the price-gouging story

What's notable here is that there is a lot of complaining when energy companies are making lots of money, but nobody seems to care when oil prices are low. That sometimes leads Shell, Chevron, and Exxon to bleed red ink, with no mass of politicians stepping forward to suggest giving them a helping hand.

Brent Crude Oil Wholesale Spot Petroleum Price data by YCharts

That's the tell. Politicians feeling the heat from consumers angry about high energy prices are simply looking for an easy scapegoat. There are few easier targets than a large oil company making lots of money during a period of elevated energy prices. And thus, energy companies are accused of price gouging. Some companies are more inclined than others to address this issue, with TotalEnergies (NYSE:TTE) instituting a fuel price cap in its home country of France even as it pushes back against claims that it is making "superprofits."

If you include energy companies in your portfolio, however, you effectively hedge yourself against rising energy costs. That's about all you can do, and it's why owning stocks like Shell, Chevron, and Exxon is a good idea for long-term diversification. You'll feel the hit at the pump, but at least you'll benefit as the stock prices of energy companies rise along with energy prices.

Stick to the biggest and strongest companies

You could, of course, buy a small oil driller and get the same benefit. However, integrated energy majors like Shell, Chevron, and Exxon have exposure to the entire energy value chain, which helps to temper the industry's swings. Remember that oil prices go up and down.

Also, energy majors tend to offer attractive dividend yields, with Exxon at 2.5%, Shell at 3.4%, and Chevron at 3.5%. Notably, Exxon and Chevron have both increased their annual dividends for decades, suggesting they could even be a good fit for conservative dividend investors.

Reuben Gregg Brewer has positions in TotalEnergies Se. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.