It is an inevitable by-product of the crude oil refining process and of natural gas processing. In natural gas processing, the natural gas is cleaned off heavy hydrocarbons such as propane and butane before distribution. About 60% of global LP Gas supply comes from natural gas processing (WLPGA, 2011). In crude oil refining, LPG is a by-product of the refining process. LPG is gaseous at room temperature and changes to a liquid when compressed at moderate pressure or chilled. The chemical composition of LPG can vary, but is usually made up of butane and propane with a 30-99% propane mix.

It is increasingly used as an aerosol propellant and a refrigerant, replacing chlorofluorocarbons in an effort to reduce damage to the ozone layer. When specifically used as a vehicle fuel it is often referred to as autogas. Varieties of LPG bought and sold include mixes that are mostly propane (C3H8), mostly butane (C4H10) and, most commonly, mixes including both propane and butane. In the northern hemisphere winter, the mixes contain more propane, while in summer, they contain more butane. In the United States, mainly two grades of LPG are sold: commercial propane and HD-5. These specifications are published by the Gas Processors Association (GPA) and the American Society of Testing and Materials (ASTM). Propane/butane blends are also listed in these specifications. Propylene, butylenes and various other hydrocarbons are usually also present in small concentrations. HD-5 limits the amount of propylene that can be placed in LPG to 5%, and is utilized as an autogas specification. A powerful odorant, ethanethiol, is added so that leaks can be detected easily. The internationally recognized European Standard is EN 589. In the United States, tetrahydrothiophene (thiophane) or amyl mercaptan are also approved odorants,although neither is currently being utilized.

As its boiling point is below room temperature, LPG will evaporate quickly at normal temperatures and pressures and is usually supplied in pressurised steel vessels. They are typically filled to 80–85% of their capacity to allow for thermal expansion of the contained liquid. The ratio between the volumes of the vaporized gas and the liquefied gas varies depending on composition, pressure, and temperature, but is typically around 250:1. The pressure at which LPG becomes liquid, called its vapour pressure, likewise varies depending on composition and temperature; for example, it is approximately 220 kilopascals (32 psi) for pure butane at 20 °C (68 °F), and approximately 2,200 kilopascals (320 psi) for pure propane at 55 °C (131 °F). LPG is heavier than air, unlike natural gas, and thus will flow along floors and tend to settle in low spots, such as basements. There are two main dangers from this. The first is a possible explosion if the mixture of LPG and air is within the explosive limits and there is an ignition source. The second is suffocation due to LPG displacing air, causing a decrease in oxygen concentration.