Oleo is a term used in older recipes that refers to margarine or oleomargarine, which is a butter substitute. Oleo is made from a combination of pure vegetable oil and skim milk, along with added salt for flavoring. This mixture undergoes an extremely rigorous blending and whipping process so that the two ingredients become completely combined and utterly smooth. A yellow dye is added to the mixture to create the appearance of real butter. Without the added dye, this whipped oil would be a milky white. While the texture and taste of Oleo are designed to be very similar to that of butter, its composition is very different. Butter is naturally derived from dairy, while Oleo is mostly made of plant oils. Oleo is lower in saturated fats and contains no cholesterol when it is completely plant-based. However, it does contain a lot of trans fat. If a recipe calls for oleo, it can be substituted with butter or margarine in almost all recipes.