Chip sealing! I know the process as they still do this for neighborhood streets around here. The oil is more like a tar and solidifies as it cools thus 'gluing' the chips to the older road surface. Sort of a stopgap before having to repave completely. I don't think this is done on dirt surfaces as it doesn't seem workable.
This process is pretty different than what I described originally. The dirt roads only hold those oils for a relatively short period.