Ok, so there have been cases where people have homogenously mixed water and oil-based fuels. It's called emulsification. I have a diesel handbook from Adele's (sp?) that shows that some low-speed diesel engines have been run on up to 25% water in emulsion with low-grade diesel oils, and those engines displayed cooler running temperatures and similar power with less fuel consumption. Keep in mind that low-speed diesel engines typically don't exceed 200 RPM.
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