Despite all the talk of constriction in the credit markets, Wall Street's buyback binge continues. But whereas retailers did much of the purchasing earlier in the cycle, it's all about the commodities now. Oil refiner Frontier (NYSE:FTO) announced its $100 million repurchase plan late last month. And metal makers Steel Dynamics (NASDAQ:STLD) and Nucor (NYSE:NUE) announced a combined $2 billion worth of buybacks of their own in late August and early September. So ... who's our next contestant on The Stock Price Is Right?

That would be oil major Chevron (NYSE:CVX), which just yesterday announced an authorization to purchase up to $15 billion in stock over the next three years -- a target that would maintain the $5 billion-per-year pace it has set over each of the past three years. The questions we'll look into today are twofold: Can Chevron afford to maintain this pace of spending? And even if it can, should it?

Can it pay?
Easily. Chevron's war chest is filled to overflowing with $12.1 billion in cash and equivalents. Against that amount, debt of $8.2 billion looks positively puny. Most importantly, Chevron generated $10.1 billion in free cash flow over the past 12 months. The firm has a plethora of options for how to deploy its cash during the buyback, but the long and the short of it is that Chevron can buy back all it wants, whenever it wants.

Should it pay?
I'm honestly not sure it should. I mean, for one thing, Chevron's stock is trading not just at 52-week highs, but at its highest price ever. If something should happen to send the price of oil tumbling -- something like, oh, I don't know, a recession -- buying back shares at the top could look incredibly dumb in retrospect.

But on the other hand, Chevron's trading at these highs for a reason: It's raining cash in the oil patch, and I just don't see much better use for all the cash Chevron is throwing off these days. The firm already offers a better dividend payout than what Exxon Mobil (NYSE:XOM) or ConocoPhillips (NYSE:COP) provides. And the drop in interest rates decreases the attractiveness of paying down debt.

So maybe, just maybe, paying for richly priced shares really is the best way to return value to shareholders. It sure hasn't hurt over the past three years.

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.