On Saturday, November 28, 2015 at 10:18:59 AM UTC-8, Christopher Tidy wrote:
My suspicion is that oil isn't a good enough insulator, especially in
practice with a pinch of dirt and water in it.

This could be true. I need to find figures for the resistivity of used transformer oil. I can make sure it's visually clean, but clean room standards won't apply.

Insulating oils (I've used Shell Diala AX) are inexpensive. Just buy a can.
Used oil, presumably, is recycled (re-refined), and won't be easy to locate.