Ok, bit of a late reply, but here goes.
The problem you have is either contact dermititus (sp) or just an irritation caused by the oil or something in it.
I myself am a mechanic and i always come into contact with oil, petrol, diesel, greace... Without protection, i often get rashes and lil blisters or cracked, dry skin.
To help protect my hands i use either latex or nytril (sp) gloves. Ok, not so good for your arms or the fire. So when working around hot engines i use a barrier cream. Just apply to your hands and arms. It will leave a film on your skin that acts as a... 'barrier'. When you are all done, wash up and use a light moisturiser.
All should be better then.
'You can only be free when you have nothing to loose'