It is a by-product of the refinement of crude oil. LPG is also produced when Natural Gas (Methane) is extracted from the gas fields and 'dried' before being piped to homes and industry.
There are two basic types of LPG. Butane is commonly used as lighter, heater or camping stove fuel and in recent times as a propellant for aerosol cans of paint, hair spray, fly spray and so on. Propane is the gas used for road fuel as its calorific value (how much heat a given amount of gas measured by weight will produce when burned) is significantly higher than that of Butane.
LPG has one unique and very special property. If mildly compressed it easily changes to a liquid state. This allows a large amount of gas (stored energy) to be contained in a relatively small space. The reverse process is just as fortunate - If decompressed (allowed to escape the pressure vessel) the liquid gas will quickly revert to its gaseous state (vapourise).
In other words, store LPG in a pressurised tank and it will remain liquid, occupying only a small space. Release some of the liquid and it will immediately revert to its gaseous state, expanding as it does so. Liquid Propane expands to 250 times its liquid volume when reverting to gas. The reverse applies, as gaseous LPG will 'shrink' by 250 times when compressed and liquification takes place.
If you release liquid propane into the atmosphere it will be seen to bubble and fizz. The liquid is boiling, releasing vapour (gas) as it does so just like boiling water releases steam, (vapour) albeit at a much cooler temperature. It will do this right down to minus 42 degrees C, which ensures that it will vapourise in all but the coldest climates and conditions.
Other gases (such as the natural gas many of us use in our homes) make a good fuel for an internal combustion engine but do not possess this unique property. Thus, far less compressed but non-liquid gas may be stored in a tank of a given volume and the vehicle's range is severely reduced