To William Nordhouse, the world is like a bathtub.
The Yale University economics professor isn’t suggesting that our planet is awash in luxurious bubbles or afloat among rubber ducks. Instead, he uses the bathtub analogy to help people understand the integrated nature of the world oil market and how it influences oil pricing by the barrel.
We’re conditioned to believe that the more there is of something, the less it sells for. That’s sort of a basic Econ 101 concept, right? That would lead us to expect that, as the US produces more oil from shale developments, the global price of oil will go down.
