Local state-backed outlet the Beijing News last week published an investigation into what it called an "open secret" in the transportation industry.
The outlet found that several tanker trucks had transported edible cooking oil immediately after unloading coal oil, with no cleaning process in between journeys.
Truck drivers told the newspaper the practice helped to cut costs in the face of increasing competition.
The outlet also quoted food science expert Zhu Yi as saying that long-term consumption of coal oil, which consists mainly of hydrocarbons, could lead to poisoning.
Authorities have vowed to crack down, with the central government announcing Tuesday that it would launch an investigation.
Beijing has in recent years pledged to do much more to tighten food safety regulations and strengthen public trust.
The Chinese public is no stranger to scandals around food safety.
Milk adulterated with the chemical melamine killed six infants and poisoned hundreds of thousands of children in 2008.
In 2022, Chinese pork-processing giant Henan Shuanghui apologised after unhygienic work practices such as packaging meat that had dropped on the floor and workers wearing dirty uniforms were exposed.
And last year, top beermaker Tsingtao opened an investigation after a video that appeared to show a factory employee urinating on raw ingredients went viral.
Social media users expressed outrage at the latest contamination scandal.
"After reading these issues that have been exposed, I am not shocked at all!" said one user on the X-like social media platform Weibo.
"From melamine to drinking kerosene, what have we not experienced?"
Another user said they hoped for a "quick" investigation and a "clear explanation" from authorities.
"Otherwise, I really don't know what oil to buy," they wrote.
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