The displacement and eventual replacement of fossil-derived fuel gases with biomass-derived alternatives can help the energy sector to achieve net zero by 2050. Decarboxylation of butyric acid, which can be obtained from biomass, can produce high yields of propane, a component of liquefied petroleum gases. The use of different gaseous reaction atmospheres of nitrogen, hydrogen, and compressed air during the catalytic hydrothermal conversion of butyric acid to propane have been investigated in a batch reactor within a temperature range of 200–350 °C. The experimental results were statistically evaluated to find the optimum conditions to produce propane via decarboxylation while minimizing other potential side reactions. The results revealed that nitrogen gas was the most appropriate atmosphere to control propane production under the test conditions between 250 °C and 300 °C, during which the highest hydrocarbon selectivity for propane of up to 97% was achieved. Below this temperature range, butyric acid conversion remained low under the three reaction atmospheres. Above 300 °C, competing reactions became more significant. Under compressed air atmosphere, oxidation to CO2 became dominant, and under nitrogen, thermal cracking of propane became significant, producing both ethane and methane as side products. Interestingly, under a hydrogen atmosphere, hydrogenolytic cracking propane became dominant, leading to multiple C–C bond cleavages to produce methane as the main side product at 350 °C.