This gall is produced by the harmless Cynipid gall wasp (Callirhytis seminator). These wasps lay their eggs on a specific plant and the eggs produce the grubs whose secretions cause the gall formation. The gall provides protection and nutrition. Their favorite host plants are oaks.
The galls do not harm the tree, so the best integrated pest management practice is to co-exist. One-to three-weeks later a wasp will emerge. It is another amazing insect-plant relationship.