History’s Biggest Oil Boom: “The Third Age Of Oil & Gas Law”

The oil boom happening now in Texas is the biggest commodity boom the world has ever seen. We all know the stories of history’s oil and gold rushes—the heroes and villains, fortunes made and lost. But this boom dwarfs every previous commodity boom.

I’ve just posted my new Indiana Law Journal article, which shows how this new boom is transforming oil and gas law; it’s titled The Third Age of Oil and Gas Law. But it starts by explaining how oil and gas has always been the crucible and catalyst for the most important legal trends of the modern world: the transition from common law to regulatory state, the rise of private governance, and the shift to a multi- polar international order.

The article shows how modern oil and gas law was born on private land in the United States, explaining the economic logic of the oil and gas lease, which was the legal innovation that made the modern world possible. It shows how the center of gravity shifted overseas as the Middle East came to dominate oil production. Finally, the article concludes by showing how public and private landowners can ensure maximum benefit from the unprecedented oil boom now transforming the United States.

As you read the article, keep the following visualizations handy. The first shows how the oil and gas industry started in the United States, spread to Russia and the Middle East, and is now shifting back to the United States.

The second shows how the new boom has transformed the U.S. oil and gas industry, with new production concentrated in Texas.

Here are chart versions of those two visualizations, which focus on more recent years.

Here’s production by country since 1950.

Here’s production by state since 2005.

Here is the abstract for the article.

History’s biggest oil boom is happening right now, in the United States, ushering in the third age of oil and gas law. The first age of oil and gas law also began in the United States a century ago when landowners and oil companies developed the oil and gas lease. The lease made the modern oil and gas industry possible and soon spread as the model for development around the world. In the second age of oil and gas law, landowners and nations across the globe developed new legal agreements that improved upon the lease and won these resource owners a larger share of the benefits of oil and gas production. The third age of oil and gas law, which is now beginning, will be defined by three forces. First, fracking is transforming the common law doctrines that underlie oil and gas law and policy. Second, both private and public landowners are perfecting agreements that can win them a greater share of the oil and gas under their land. Third, public landowners are beginning to seek ways to balance their efforts to extract maximum value from their oil with their efforts to limit climate change.

This Article is the first to identify these ages of oil and gas law, which have been central to the development of law, the global economy, and the modern world. It also reveals the legal and economic logic of agreements between oil and gas companies and public and private landowners, and how they have evolved over the past century. And it describes how landowners can ensure maximum benefit from the unprecedented oil boom now transforming global oil production.

Cite as: James W. Coleman, The Third Age of Oil and Gas Law, 95 Ind. L.J. _, _ (forthcoming 2020) https://ssrn.com/abstract=3367921.