I just looked up flaming oil in my Basic D&D book. It did 1d8 damage on the first round and 1d8 in the second. Of course, it was more complicated than its watered-down 4e equivalent, Alchemist’s Fire: with Flaming Oil, you had to douse a guy with oil and then make an easy attack roll to set the enemy on fire.Still, 2d8 was a lot of damage in Basic D&D. Keep in mind that all weapons do 1d6: variable weapon damage is still listed an optional rule in my 1983 Basic set. Even with the optional rule, oil’s average of 9 damage is the same average as a fighter with 18 strength and a +2 longsword. It’s enough, on average, to kill a 2-hit dice creature in one shot. It’s hard to compare, but in 4e, to kill a 2nd level creature in one hit would take about 40 damage.
There wasn’t much monetary inflation between Basic and 4e – a Basic sword costs 10gp and a 4e sword costs 15 gp – but Basic flaming oil costs 2gp. That’s a tenth of its cost in 4e. Cheaper and more effective.
By the way, I notice that the new 4e alchemist theme allows you to use a free alchemical item as an encounter power. That improves alchemy considerably.