Oil in propane line

havent seen that problem in many years. its said by some to be grease forced out of the rubber material in the hoses. who knows.
the repair is to detach the lines, as needed for access, force a small wire thru the steel lines and attach some type of wiper on the end of the wire. this will wipe the lines clean. ive done it, and its a real pain. takes several times to get it clean. the rubber lines will also need to be cleaned.
as always, leak test when the pipes are reconnected and pressurized.

Oil residues plugging propane lines has been a topic of discussion for years. Even the big boy propane companies can't agree on exactly where they come from. Here's a link to one discussion on the subject if anyone's interested.

Most of that discussion has to do with other uses than in RV's, but there's one point made that's worth paying attention to.

IMPCO wrote:
During the process of vaporization some heavy ends will collect within the regulator over time. This can be reduced by mounting the regulator with the outlet pointed down

That's evidently one reason the regulators are meant to be installed pointing down, and checking for proper positioning is well worth doing.

Since your water heater is supplied via the regulator from the VAPOR port, the only way long hydrocarbon contaminants can get in those lines is if the tank is overfilled. If liquid reaches the regulator, sure, you can get contaminants.

This is also an issue for liquid LP appliances.

are you sure it is oil? it might be liquid propane.

I've heard about it a few times on here. Apparently there is some kind of oil that gets introduced into the propane tanks and it can migrate into the lines over time. I guess the only fix is to do as you did and blow it out.