The hydrophobic effect refers to the tendency of nonpolar substances to avoid contact with water. When nonpolar molecules, like oils or fats, are placed in water, they cluster together to minimize their exposure to the water molecules. This clustering occurs because water molecules prefer to interact with each other rather than with nonpolar substances, leading to a decrease in the overall energy of the system. This phenomenon is crucial in biological systems, particularly in the formation of cell membranes. The phospholipids that make up cell membranes have hydrophilic (water-attracting) heads and hydrophobic (water-repelling) tails. This arrangement allows them to form a bilayer, creating a barrier that separates the interior of the cell from its external environment.