Now, the methods for establishing price, as we talked about and as Errera mentions, both NYMEX and cash can influence one another. For instance, if cash prices tick up due to high demand in a cold winter or hot summer, then those trading the NYMEX contracts are going to get that information. And they're going to essentially assimilate it and then buy contracts accordingly.
And then the converse is also true. If the cash marketplace, let's say, for instance, in a particularly a shoulder month or if the cash marketplace is trying to determine what prices might be for the fall and winter, they're going to look to the New York Mercantile Exchange for price discovery and price indications. So, again, the idea that both financial and physical prices tend to track one another in parallelism and the fact that they tend to match one another upon the settlement of the futures contract, or convergence, means that they both can influence either in the prices themselves.
What we have are, though, we've got major publications that we'll talk about. And what they do is they have polling or survey methodology. In a lot of cases, they'll actually call markets and suppliers to find out what types of trades that they have conducted in the physical marketplace.
These days, it's probably more than likely that the information is being emailed to the publication or faxed to the publication. And when the publishers get that information, they have to establish what we call a weighted average cost of gas, or WACOG, or a weighted average sales price, or WASP. That means that they're taking, say, for instance, natural gas.
If there was 5,000 MMBtus, they trade it at $2.50. And then another supplier reports that there's 10,000 MMBtus. They traded it to $2.55. You can't just take the simple average. OK. They actually weight those.
And then what happens is they post the prices. That's the term that we use. That means they put a publication out, and they actually have the prices there. And then we refer to them as indexes or postings. Generally, in things like the crude oil and natural gas liquids, they do use the term postings. On the natural gas side, they tend to use the word index.
And generally, what you'll see on under the postings is the actual location, which is important. It's the physical location where either natural gas or crude oil is changing hands. They'll show the volume, the total volume traded at that location for that period of time that they're reporting it. It could be monthly. It could be a daily time period.
And, of course, the price range. In other words, what was the range of pricing at that location that was reported by the people who turned the pricing information into the publications? And then, finally, the piece of information that we're interested is the actual index. What was that weighted average price at that location?
In the natural gas industry, we've got some publications. Again, we refer to these as indexes. And they'll conduct surveys for monthly, weekly, and even daily pricing.
We've talked about this idea that especially the power industry ramps up and ramps down every day, even peak, off peak. There's times when the power plants may generate up for a few hours and then back down again. So we have a daily market. And, again, they're talking to end users, producers, and even marketing companies who are buying and selling natural gas to get the information from them.
One of the key ones is Platts. It's a Mcgraw-Hill company. And they produce what they call their monthly price guide.
Now, this is more familiarly known as Inside FERC because, initially, this was a newsletter that reported on the things that were going on at the Federal Energy Regulatory Commission. It is not affiliated with FERC. But those who have been in the industry a long time, especially traders, will refer to the Inside FERC index. But it is more formally known as Platts Monthly Price Guide.
Now this is the most widely used monthly price guide. It's a bi-monthly newsletter and price report. What they're reporting on is transactions that have taken place for an entire month. So, for instance, at the end of May, as an example, the various entities in the natural gas business are buying and selling gas for June. And when the Insight FERC publication comes out after they've assimilated all the information-- it usually comes out about the second or third working day of the following month-- people will see what the indexes are.
Now, another one that Platts puts out is what's known as Gas Daily. This is a daily price guide. OK. They actually show prices as well for monthly transactions, but they're not as widely used as Inside FERC for those. More importantly, they're used for daily and weekly prices.
OK. This is the most widely used report for daily natural gas pricing, especially what we call swing. In other words, as supply and demand change from day to day, transactions and pricing will move up or down. And then Platts gets survey information and posts it out there every business day.
In terms of the crude and natural gas liquids industry, the common-- excuse me-- the most important publications there and therefore the most important postings are going to come from generally two sources. One is what's known as OPIS. It's the Oil Price Information Service.
This is for natural gas liquids. They put out the monthly and daily negotiated pricing. They have a market overview, although it's a commentary. And then they report prices at the major natural gas liquids hubs around North America.
Now ARGUS. ARGUS is primarily known for crude oil pricing and refined products pricing, things like gasoline, jet fuel, et cetera. They put out monthly pricing, daily pricing. Now, they have a market overview. And then they give major hub reports. In their case, though, in addition to giving major hub reports around in North America, they give prices for various global oil markers, not just WTI, Brent’s, and Dubai Oman, but various other marker prices around the world.
And then I want to talk for a minute about electronic platforms. The Intercontinental Exchange. They're based out of Atlanta, Georgia. They also own ICE Futures Europe, which used to be the international petroleum exchange in London.
At the end of every day, they have settlement prices that are automatically calculated. In other words, they're calculating all the trades that occurred electronically on their system. In other words, it's not manually done. The weighted average cost and the weighted average sales prices are calculated.
Now, they handle thousands of physical and financial products. And it's anonymous counterparty trading. In other words, when you buy or sell on ICE, you're just looking at prices. And if you execute a trade, then you'll get a pop-up window that tells you who the counterparty is that you just transacted that with.
ICE themselves, they're strictly a broker. That is, all they're doing is getting a minor commission for providing the platform out there for counterparties to trade. And then they, again, they put out their daily postings where everything gets settled. And you can go out there and look and see.
For instance, you can find a natural gas hub and see what the average price was for all the trades that occurred on the Intercontinental Exchange. Now, one of the big advantages is this is not human beings reporting prices. This is a machine in essence spitting out actual transactions that occurred. So there's no price fixing possible, and there's no erroneous prices being reported to the publications.
The natural gas industry especially went through a period in the early 2000s where there was in fact price fixing, false reports-- excuse me-- false prices were reported to publications, which influenced pricing. As a result, the Commodity Futures Trading Commission along with the SEC did investigations. There were natural gas traders who were fined and even got some jail time for doing that.
So really, the ICE prices to me would be the most transparent and the most honest, so to speak. And it should be utilized. And really, some of these other publications should go away because they're-- to me, they're relying on human pricing.