Refining Oil[]
First things first, you will need to find oil . Oil can be found in small pockets visible to the surface, in medium size pockets that geyser to the surface, and large deposits that spew 20+ blocks into the air. Large and medium pockets can be found almost everywhere, and are easiest to find if you have a mode for flight, such as Swiftwolf's Rending Gale . Small pockets are easy to find in deserts, but yeild very little oil, so it is best to find a bigger pocket. However, it is usually an excellent idea to start with small pockets, and work your way up.
The next step is getting the oil to your home. If the source of oil is close, you can use basic pipes (i.e. Cobblestone Waterproof Pipes .) If the source if oil is far away, waterproof teleport pipes are reccomended. These will let you teleport liquid in between them. Now that you have oil going to your house, store it in a tank. Once you have enough resources, another option for making oil is an oil fabricator.
Once you have you oil in your tanks, you will need a refinery, and some engines. Then, you will need to pump the oil out of your tanks. This can be done by putting a wooden waterproof pipe underneath the tanks, and having an engine ( a redstone engine works here) power the wooden pipe. Then, connect the refinery to the wooden pipe (with cobblestone waterproof pipe.) This will pump the oil from the tank, and to your refinery.
Now that you have oil in your refinery, you will need to power it. Redstone engines are very slow for this, steam engines or better is reccomended. Once your refinery is powered, run a pipe from the front of the refinery to new, empty tanks. Your refined oil will flow into it.
To use your new fuel, make a combustion engine . Then, take an empty bucket and fill it from the tank (right click a filled portion.) Now, its your call on what you power with the combusition engine. They run quarries with incredible speed, but work on anything else as well. Once you have decided, place the combustion engine where it can power your block. Then, left click it with your open hand. This will open a menu with two mini tanks. Put your fuel bucket on the left tank. If your engine will be running for an extended period of time, put water buckets in the right tank. Finally, just place a redstone torch next to the engine to get it moving!
Alternate Steps[]
In addition to the method above, you can "cheat" some steps:
1. You can take one bucket of oil and EMC it. Then, take the EMC'd buckets to your oil tank, and right click the tank with your oil buckets. This empties the bucket into the tank, letting you "cheat" finding oil.
2. You can use waterproof pipes to send water and fuel to combustion engines. Simply pump the fuel out of the fuel tank with a wooden waterproof pipe, and connect the wooden waterproof pipe to the combustion engine with cobblestone waterproof pipe. And for water, you can get a buildcraft pump, and using cobblestone waterproof pipe to pump the water to the combustion engine. You can "cheat" the bucket transfer method in this way.