The main choices applicable for outback travel are diesel and petrol.
Petrol engines are very responsive and have more power than gas or diesel but it is also an explosive fuel. Petrol engines are more prone to stalling in river crossings unless extensively prepared. However, they tend to survive if water gets into the motor whereas a diesel can blow its head with just a drop.
Diesel is the most common fuel used in outback Australia. Diesel fuel is generally safer because it does not ignite as quickly. Diesel engines generally require less maintenance than petrol engines. In the past, one of diesels main attractions to vehicle owners was that it was cheaper than petrol. In the last couple of years this has changed and diesel is now generally more expensive.
It is interesting to note the overall reluctance of outback Australian's to use modern petrol computer-managed electronic fuel-injected vehicles. This is due to the inability for roadside repairs to get them going again if they fail. If things go wrong in the outback you can be a long way from anywhere with little chance of someone passing by. Australian's tend to prefer total self-reliance and this attitude is a good one to adopt if you are planning to travel extensively anywhere on this land.
Be aware that if you have a Petrol driven vehicle and travel to some very remote areas, then you may also be forced to use AvGas or the new BP alternative Opal ULP. This is now common place if refuelling in Aboriginal communities.
The supply of LPG gas is limited in outback Australia so although some 4WD vehicles can have a dual fuel system fitted that enables them to carry both petrol and gas, these systems often limit your petrol range and are therefore not the ideal combination for outback reliability. If you do choose a gas system avoid copper lines as these fracture with body flexing.
Before you buy, it may be worthwhile to
check the fuel prices around Australia as to the general overall costs of diesel versus unleaded versus gas.