Chili oil is used in many Chinese recipes and it's a handy ingredient to have in your cupboard. You can buy it ready made but it's super easy to just make it yourself and it lasts forever.
Step 1: Ingredients
1) Coarse Ground Chili Powder from local Asian market. (Enough to fill the storage container 1/3-1/2 way).
2) Oil - Corn/Canola/Vegetable etc. (Enough to fill the rest of the container).
3) Container you are going to store the oil in.
Ideally you should try and get the chili powder at an asian market as the powder available there is usually a different coarsness than what's available at the regular grocery store. In terms of coarsness it's somewhere between regular chili powder and chili flakes. (If you're stuck and you can't get to an asian store then chili flakes can be substituted but don't use regular chili powder as that really won't work as well)
Preferably ceramic or metal. Glass also works but it may crack as you'll be pouring hot oil into it. Plastic definitely DOES NOT work. Place the container in the kitchen sink in case of spillage. (You'll be dealing with hot oil so it's especially important to be careful with this recipe)..
Step 2: Prepare the Oil
1) Pour the chili powder into the storage container. For a stronger oil fill it about half way for a milder oil fill it about 1/3 of the way.
2) Heat the oil in a pan over medium/high heat. This is the most important part of the process. You want to heat the oil to the point where it's shimmering and tiny bubbles are starting to form. If you flick a drop of water on the oil it should sizzle instantly, however, if the oil starts to smoke then it's too hot.
3) Once the oil is hot enough, CAREFULLY pour the the oil into the storage container. You should hear the chili powder sizzling as it cooks in the oil.
4) Allow to cool and store in a cool dry place.