Banana oil describes two different liquids. Synthetic banana oil combines fusel oil and sodium acetate. Fusel oil is created when potato, corn or grape alcohol is distilled. It is poisonous and foul-tasting until sodium acetate is added. This makes the compound harmless and creates a strong banana taste and smell. Naturally derived banana oil comes from cold-pressed bananas. The natural oil is extruded and bottled. Both types are used for similar purposes, but the synthetic version is much less expensive.