I think this is the most likely scenario. I like the explanation for the singed clothes too. That was one of my moms most vivid memories. I imagine her dad got grumpy if he found a burnt spot on his work pants. Standing by a kettle of boiling water with a paddle is the sort of mundane task you’d give a kid. Something useful they can actually do and not screw up.
My husband has reported that his grandparents also cleaned oily clothes in gasoline, in Louisiana. I’ve always been fairly incredulous, but he is adamant it’s true. He has an additional story about an accident when someone intended to throw water on something and grabbed the gasoline instead, which indeed resulted in a fire.
As for the cost of gasoline, this was Louisiana in the middle of the oilfields, in the 1930s.
I worked with a guy who came from, to put it politely, a Carolinas white trash background. He had mostly grown out of it, but the things he and his brothers did were appalling, and the stories of things their dad and uncles did was worse. They could never let the old man borrow their cars, because he’d fill them up with whatever solvent was handy - paint or lacquer thinner, acetone, methanol - and while that might have worked with pre-1970s beaters, it was hell on cars with catalytic converters and so forth.
They talked about the time they were on a road trip with their dad and the truck’s gas tank started leaking. He stopped at a country garage, borrowed an oxy torch, and welded up the leak. He was sure that a full tank of gas would absorb the heat and be no danger. He was apparently right, but even my knuckle-dragging partner told it as a “my old man is an idiot” story.
Standing by a kettle of boiling water with a paddle is the sort of mundane task you’d give a kid. Something useful they can actually do and not screw up.