better cap it at 20d6, the same damage as submerged in lava.
I have no problem with 1d6 per attack, I would be happer with a better method if you throw a bigger bottle of the stuff, but I don't have one. If you use fabricate or major creaton to make 10 cubic feet of the stuff that's 598.4 pints! ick.
As I recall one of the rules for oil in 1e or 2e was each time you doubled the oil you added a d6 of damage and you got 1/2 the damage each following round until you were down to 1d6.
It could have been a house rule, I'm way to lazy to try to find it.