Adding water to cooking oil is not ideal. They will not mix and the water will escape as steam since oil has a high flash point (temperature at which it becomes a vapor). The combustion will be uneven. There is also a balance between how much water is added and how much oil there is, temperatures will not always be consistent. In a sense it will produce more energy since water will vaporize faster, but oil and water will never mix and it will be difficult to produce a fuel with a constant oil-to-water ratio.
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