Another Semi-related Idea would be Vegetable oils. Vegetable oils would be identical to petrol in every way, save a few crucial differences:
1) It would be extracted from plants like, say, canola. Say, Just enough to cover a tile from 10 canola bunches, 20 bunches for 1/7, 40 for 2/7, 60 for 3/7 and so on up until 140 bunches of canola to produce a tile full of Canola oil. (Obviously, this is waaay less efficient than oil.)
2) It wouldn't be lethal to swim in (unless it was on fire)
3) A dwarf could use it in cooking, say for a "Fry" job (Fried Alcohol roast, anyone?)
4) It wouldn't be nearly as valuable.
5) It wouldn't produce as much light when burned in a lantern or other light source. Additionally, It would produce more smoke.
6) Burning copious amount of crude oil would get the elves cheesed at you for raping the earth or polluting the atmosphere or something. Crude smoke would also suffocate trees, and if you have huge boiling pits of oil or something, Humans would be less inclined to trade and migrants would be less inclined to come (Because it's hard to breathe or because nobody wants to trek to a place that looks like an evil citadel). Vegetable oil would not pose these problems.