Liquefied petroleum gas is already widely used as a vehicle fuel in the US, Canada, the Netherlands, Japan and elsewhere. In Japan, 260,000 taxis, 94% of the total number of taxis, use LPG as their fuel. As a fuel for spark-ignition engines, it has many of the same advantages as natural gas, with the additional advantage of being easier to carry aboard the vehicle.

Its major disadvantage is the limited supply, which would rule out any large-scale conversion to LPG fuel. As with natural gas, nearly all LPG vehicles presently in operation are retrofitted gasoline vehicles. The costs of converting from gasoline to propane are considerably less than those of converting to natural gas, due primarily to the lower cost of the fuel tanks. For a light-duty vehicle, conversion costs of US$800-1,500 are typical. As with natural gas, the cost of conversion for high-use vehicles can typically be recovered through lower fuel costs within a few years.

Engine technology for LPG vehicles is very similar to that for natural gas vehicles, with the exception that LPG is seldom used in dual-fuel diesel applications, due to its poorer knock resistance.

LPG has many of the same emissions characteristics as natural gas. The fact that it is primarily propane (or a propane/butane mixture) rather than methane affects the composition of exhaust VOC emissions, but otherwise the two fuels are similar.

LPG is produced in the extraction of heavier liquids from natural gas, and as a byproduct in petroleum refining. Presently, LPG supply exceeds the demand in most petroleum-refining countries, so the price is low compared to other hydrocarbons. Depending on the locale, however, the additional costs of storing and transporting LPG may more than offset this advantage.