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Fuel is the refined version of oil. It is produced by putting oil into an oil refinery and it is highly recommended to do so as it is significantly more efficent than oil when burned in a combustion engine. Edit
In BC 2.2.2 SMP 7.5 times, and in BC2.2.14SSP 19 times as much energy was generated from a single bucket. In the newest development version, oil generates 3 MJ for 20000 cycles (ticks), and fuel generates 6 MJ for 100000 cycles, so fuel yields 6 times more energy overall.
When taking into account the energy spent refining each bucket of oil version 2.2.14 generated 16 times as much energy per bucket, and each bucket lasted 42.5 minutes (5 times longer than oil).