Diesel engine manufacturers are also being squeezed as governments place more and more pressure on them to comply with tightening emissions standards.

Also widely referred to as Autogas, LPG is cleaner burning than petrol or diesel, so fewer deposits build in vehicle engines. LPG is a mix of propane and butane. When pressurised, it becomes a liquid and it is in this form that it is pumped into the vehicle's fuel tank.

Perhaps one of the most telling barometers of the popularity of LPG vehicles in Australia has been the recent strength of the values at recent fleet auctions.

In December, automotive auction house Auto Group said LPG vehicles were typically fetching a premium of $1500-$2000 over petrol-powered equivalents, with the residual values of gas vehicles having "improved dramatically" since petrol prices began rising steeply in mid-2005.

At the same time, the auction house says residual values for light commercial vehicles and petrol-powered large cars had receded.

"The competitive bidding for gas cars is very strong with demand outstripping supply," Auto Group's consignment manager, Peter McGinnity said.

"Autogas commercial vehicles such as utes and vans are exceptionally popular, but we're seeing strong auction results for the sedans and wagons as well.

"In 2004 a three-year-old petrol utility would have fetched an average of $18,500 at auction and the autogas equivalent $17,500 – but now petrol utes are averaging only $16,500 at auction while autogas versions are averaging $19,500.

"Not only do you make further savings at disposal time because of the lower depreciation, but the running costs are also lower because of the much lower price per litre of gas."

While the per-litre consumption of LPG is much higher than petrol on comparable engines, it is not enough to offset the lower cost per litre of LPG.

But LPG also has its drawbacks.

According to the Royal Automobile Association, most engines suffer a slight loss of performance when converted to Autogas. This is mainly due to the compromises needed to use gas in an engine originally designed for petrol.

In addition, the cost of installation must be recovered before savings are made. Installation costs currently average around $1,400 to $2,000.

So LPG conversions are still really only a viable, efficient option where high mileages are involved.

Additionally, in small cars and certain station wagons, the loss of luggage space due to cylinder size can be quite substantial, with the cylinder encroaching well into the luggage area.

In spite of this, the peak body for the LPG industry, LPG Australia (formerly known as Australian Liquefied Petroleum Gas Association), said installations of LPG systems in Australian vehicles was expected to grow by more than 25% by the end of 2005.

The group said by year’s end an additional 40,000 Autogas vehicles would have hit Australian roads, compared to 31,706 vehicles in 2004.

There are now more than half a million Autogas-powered motor vehicles on Australian roads.

LPG Australia said almost all of the market growth has occurred since July, when petrol prices rose dramatically.

"System installers reported a massive increase in business as the gap between the price of petrol and LPG Autogas rose to as much as 90 cents a litre," LPG Australia spokesperson Phil Westlake said.

While the price gap has closed a little in recent months Westlake said the petrol price shock has put Autogas "permanently back on the radar of consumers".

The growth in sales of Autogas systems has been particularly dramatic in Victoria, where in the nine months to the end of September 2005, there were 10,490 installations – an increase of 4800 or 84% over the same period of 2004.

In Tasmania installations were up 64% for the same period.

Ford Australia said sales of its LPG-dedicated E-Gas Falcon sedans and wagons had totalled 6436 for the year to the end of October – an increase of 1968 or 44% over the same period of 2004.

The figures show that 10.8% of all Falcons sold in 2005 were E-Gas models, compared to 6.3% last year.

Westlake's view was supported by the Victorian Automobile Chamber of Commerce (VACC), which said the Federal Government's recent move to encourage the use of ethanol in motor vehicles overlooks an established alternative fuel.

"If just a fraction of these funds were directed to assisting consumers to convert their cars to LPG, we could have a significant proportion of the vehicle fleet running on LPG," VACC executive director David Purchase said.

And it’s not just the installation rates of LPG systems that are increasing.

Advances in LPG system technology have seen them become safer and more compact, making LPG more viable as a substitute for more traditional fuels.

Last June, an LPG tank which its makers said was safer and more space-efficient than the current market offerings began trials by car manufacturers and government bodies in the US, China, Korea, New Zealand and Australia.

Built by Propane Performance Industries (PPI), the tank's design is almost rectangular in shape, being half the width and just 35% taller than a cylindrical tank of the same volume.

LPG Autogas said the shape was only possible because of the tank's modular construction, which comprises a row of semi-circular aluminium cells joined by straight interlocking extrusions.

"This system solves the problem of traditional cylindrical Autogas tanks that do not package very efficiently, robbing the vehicle of significant amounts of boot or load space," PPI spokesperson Guy Obren said.

In Australia, PPI has been jointly developing conformable tank systems with Boral Alternative Fuels of Sydney for trial fitment to Ford's Falcon and Territory models.

In New Zealand, Hyundai has commissioned PPI to trial-fit a conformable tank to one of the manufacturer’s small cars – which is currently offered in Korea with an optional factory-fitted Autogas system.

In addition to its space-saving properties, PPI says the tank is significantly safer than traditional Autogas tanks in the event of rear-end impact.

The conformable tank has successfully undergone trials in police cars in the US, where explosions in petrol-powered highway patrol cars caused by high-speed rear-end impacts have occurred.

LPG Australia said soaring petrol prices had led to a resurgence in Autogas vehicle and system sales, including tanks.

Obren said the tank was able to withstand impacts of up 160kmph without leaking in testing.