Domestic oil and natural gas are in play from Wyoming to West Virginia. Agents for oil-and-gas (o&g) companies, known as landmen, are leasing land for drilling and production (www.landmen.net). A lot of cash is being waved under a lot of noses.

Most landowners, including us, want to work a deal, because of the money. We also want to be treated fairly, and protect our property and its future value.

The written agreement between landowner (lessor) and company (lessee) governs the money and how development is conducted. Oral agreements don’t count.

Here are points for landowners to consider regarding o&g leases.

Common interests. You and the leasing company share an interest in making money from your minerals. Both sides try to negotiate as much money from the other as possible. Companies generally get the longer end of these sticks because they are in better bargaining positions and are far more knowledgeable.

What’s fair money to the landowner? It depends on the specific time, place and current market conditions. Two years ago, we signed a lease that provided $5 per acre in rental, which was the market price in our area at that time. Today, it would bring $30 to $50/A, because the natural gas in the Marcellus shale is now in play. Five dollars was fair then, not now.

It’s easier to judge what’s obviously unfair than what’s obviously fair at any given time.

Leases might be more fair if companies would give landowners the option of riding the market like an adjustable rate mortgage. Rental and royalty formulas would be revised every five years in light of market conditions.

If you want the money from these leases, you need to give up more than the minerals. Companies want to be allowed to do what is most efficient from their perspective with your property’s surface. A landowner should consider confining these activities in a reasonable way and restricting them to certain spots. Both sides have to find a balance between what each wants and what each can live with.

Understand the words and phrases in your lease. State law and judicial interpretation establish the legal meaning of lease language. A guy like me doesn’t have a clue as to the meaning of “appurtenant above-ground facilities” on a pipeline right of way. Is it any structure the company wants to build within the right of way? Or does “appurtenant” give the company the right build a compressor off the right of way?

Before signing a lease or right-of-way easement, ask the company to write out its definition of important terms and then talk to a lawyer who knows o&g law.

Money, I. A landowner gets money from minerals in at least two ways: rental (an annual, per-acre payment) and royalty (a percent of money earned from any production).

Both are negotiable. Landowners should know the rates others in their area have recently negotiated. This may or may not be found in the recorded leases at the courthouse. The ROW agreement proposed to me says the landowners have granted the easement “for and in consideration of $10.00.” The $10,000 never appears.

Landowner groups have sprung up around the country, such as the West Virginia Surface Owners’ Rights Organization (www.wvsoro.org) and the Natural Gas Lease Forum for Landowners (www.pagaslease.com). The latter posts current offers in Pennsylvania and West Virginia, with much other information. Both sites have informative resources and links.

Landowner groups are forming to negotiate as one over rental and royalty. Their purpose is not to monkey-wrench a deal, but to get a better one by evening the sides.

Money, II. Landowners often think about lease rentals and royalties as free money, because it’s not sweat-earned. It may be free in that sense, but it is not without cost to the landowner.

If you ever sell your surface property, you will probably keep the minerals. In that case, your price will be discounted because of the uncertainty and surface disruption — potential or actual — that development and production bring. How do you price that discount? It depends on how much disruption is, or is likely to be, involved. The more wells on your property, the more traffic, noise, road wear and aesthetic loss. Even if a buyer doesn’t care about these matters, he is likely to discount his price to the seller as much as the buyer who does.

If the current value of your property is $5,000/A, a modest five percent discount imposed by mineral leasing would reprice it at $4,750/A. On 100 acres, your lease will cost you an estimated $25,000 in estimated sale revenue.

Landowners seek answers to two questions: What is my lease worth to the company? and What is my likely net benefit over time from the terms I accept?

Time. Companies like to lease minerals for a fixed rate per acre and fixed royalty in perpetuity. An alternative is to revise both every five years.

Royalty. A common production royalty has been 12.5 percent of sale revenue less deductions. Today, leases are being signed for 12.5 to 20 percent and more. And some landowners have negotiated a percentage of gross sales, not net after deductions.

Well spacing. Whether the company has to space wells — a minimum of so many surface acres per well — or not depends on state law and the type of well.

With some wells, a company can suck out your o&g resource even if you didn’t sign a lease. With other wells, you will get a fair share of royalty even if you don’t lease. A landowner needs to know which type of well will be drilled on his land and next door.

One lease or many. As a rule, companies prefer to get all minerals under one lease. Some landowner groups suggest it might be better to negotiate individual leases for individual resources with the same company—for example, all gas down to the Marcellus shale, all gas in the Marcellus shale and all gas below the Marcellus shale. This is not a DIY project.

Roads. Your agreement should require exploration and production companies to repair all roads after using them to a condition that is “equal to, or better than” their condition before work began.

Waste and disposal. Wastes, equipment and junk should be removed from your property in a timely manner.

Use of water. Deep gas wells, I’m told, require about 50,000 barrels of water, which is used in the drilling and fracturing of underground rock. Landowners should understand the implications of use of their water.

Lines. All permanent lines should be buried. I’ve visited older fields that had metal and orange plastic lines hanging from trees and running around like spaghetti on LSD.

Specify location of wells and surface structures. Try to keep these facilities out of sight and sound of houses and likely house sites.

Conservation easement. If minerals are severed from surface ownership, you can’t put certain conservation easements on the surface unless you can show that minerals are not present or their economic value is so insignificant that they would never be produced.

Landowners who own their minerals might consider leasing them with No-Surface- Occupancy language, which keeps the Conservation-Easement door open for the future.

Liability. The offer I received said the company would be responsible for damage to my property caused by its negligence. That would exclude compensation for all non-negligent acts that diminish our surface, such as damage to crops, timber or roads. Companies should repair or compensate landowners for any significant damage they cause.

Mineral leasing is a complicated subject. I’ve just scratched the surface.

Some companies are good partners; others are less good. If the landowner wants to get the money, it’s his responsibility to become informed and make the best deal possible with whichever partner phones one morning.

“Sooner or later” lends me a little erudition, which I don’t deserve, because whatever follows usually comes true. Not always, but often enough.

Eight-dollar gas is likely to happen, because the world’s population is growing and most of us will use more energy than before. The wealthier we are, the more energy — particularly, petroleum products — we consume. Countries that were low-petroleum consumers on a per-capita basis in the past — India, China, Saudi Arabia and others — are increasing their use.

At the same time, oil production is not keeping pace. Despite a 57 percent increase in price last year, the world’s 15 largest oil exporters — who make up about 45 percent of all supply — shipped 2.5 percent less, according to the U.S. Department of Energy.

When price goes up, supply is supposed to go up. So why isn’t oil supply going up?

One answer is that the world has little excess supply capacity. Most of these extra spigots are in the Middle East where there’s either no incentive to open them or no ability.

The other answer is that the world is not finding and developing new oil supplies fast enough to offset the depletion of existing fields and match increasing demand.

Peak-oil theory is the idea that production from the world’s finite oil resource has increased during the last 125 years to an apex and will now begin to decline, despite higher prices. America passed its peak-oil point 35 years ago; Kuwait and Saudi Arabia will pass theirs in five or six years. And even if production does perk up for five or ten years, demand growth will exceed supply, thus boosting price at the pump and everywhere else.

As long as global demand continues to grow, it will outstrip supply sooner rather than later. More supply simply keeps the problem around longer and gives us some room to change.

Unfortunately, we will still run out of oil — a finite resource — even if we cut global demand to what we were using ten or 20 years ago. Finite means there’s a last drop, just like in a cup of coffee. It also implies a point where it’s too costly to pump out the next barrel.

Some petroleum demand is what economists call, price-sensitive. At $4 per gallon, Americans are using a bit less than at $3. But price sensitivity can take us only so far because all of us are locked into petroleum fuels for essential movement and other needs. Reducing our oil use takes a little sting out of the bite of $8 gasoline. But our oil dependency won’t change until we change the degree to which we need oil-based fuels.

One way out of these handcuffs is to shift as much of our capital stock — cars, trucks, railroads, heating plants and so on — out of petroleum and into electricity. That will allow us to reduce oil consumption and oil imports. We can husband oil for its highest and best uses, stretching it as far as we can.

Facing a flood, Noah had the good sense to build an ark. Why do we continue to enlarge our cellar?

Most of our electricity uses coal, petroleum, natural gas or nuclear power to boil water to make steam to turn a turbine. It can also be generated using non-fuel energies, such as solar, wind and hydro, among others.

All things considered, I think nuclear power along with whatever renewables we can patch in are the best ways forward for producing U.S. electricity over the next 50 years. Electricity gives us a way out of oil dependency and transition time to tinker out future energy technologies.

An electricity-based economy with a low-pollution footprint will not be cheap to build or operate. We have no cheap electricity technology. Nuclear power’s problems are more manageable in my opinion than coal’s, its principal rival. We need to make the wisest choice from among expensive, imperfect transition alternatives. Our national energy policy for 30 years has been to refuse to choose.

In the meantime, higher-price gasoline is our fate. Continuing our oil economy will change much of where we live, how we work and what we do.

Suburbs that were built for long car commutes will be left to the rich who can afford $8 gas and the poor who will be re-ghettoed out of their increasingly valuable urban neighborhoods.

People will re-house themselves in barbell patterns, concentrating in more rural areas and more urban areas, linked by highways through thinned-out suburbs.

Jobs will move away from sprawled metropolitan areas to smaller cities and towns where commuting is less costly. Blue collar and middle-class workers will move closer to their workplaces. New jobs will cluster within old cities where the cost of living is relatively cheap and economic and cultural infrastructure lingers from the past. Think Pittsburgh.

Working from home will become increasingly less exotic.

High energy prices will move people back to the countryside for one reason above all others: It is now — and will be in the future — cheaper to live here. Oil at $250 a barrel and gasoline at $8 a gallon will increase the basic cost of living for everyone everywhere, but the cost will always be higher where it’s already higher and lower where it’s already lower.

Even though rural areas now depend heavily on petroleum fuels, the total cost of country living — with the exception of certain steroidal second-home and retirement enclaves — is significantly less than in suburbs and cities. As employment is decentralized, life beyond the suburbs becomes both cheaper and more feasible.

Boomers and their descendants will turn their second homes into first homes to the extent that telecommuting is practical and gasoline commuting is not.

More and more Americans will choose to be middle-class in the country than scrape-by, oil poor in the suburbs.

Farming will have to ease out of petroleum-based agriculture. Farm productivity may fall as a result, which means more land will be drawn into farming to produce food for a growing population. Farmland will appreciate, even the not-so-good stuff.

If we shift away from an oil economy, our future — though difficult — is likely to be safer, more predictable and wiser.

And if we don’t, it will happen anyway, sooner or later.

But the countervailing trend is the probability of increasingly high energy prices, particularly for petroleum-based transportation fuels. The more it costs to drive to a weekend place, the fewer times the owners are likely to drive it. That’s the theory anyway. The related idea is that the high cost of fuel will discourage buyers from acquiring country property in the first place. This, if true, could depress sales and prices.

At the margins of the second-home and land market, I think $5/g gasoline will discourage purchases and trips. But at this price point–and higher, which I expect–consumers will start substituting fuel-efficient electric and hybrids for the SUV dinosaurs. The market is the self-selected upper one-third, or upper 20 to 25 percent of all taxpayers, so I doubt that the cost of a weekend trip rising from $50 in gas to $100 will actually discourage sales to this group.

But I could be very wrong.

Let me hear your thoughts.