Why does oil float on water
Although water itself is not very dense (1000 kg/cubic meter), oil has a density that is even lower than water density (800 kg/cubic meter) and thus it floats when spilled on water, in fact oil would ultimately float on the surface of the water, even if you stir the two together. If one takes a glass of water and tries to mix 1 cubic unit of oil in it, then in order for the attempt to be successful, the cubic unit of oil must displace the exact same amount of water within the glass. Now, the density of oil is less than that of water, therefore 1 cubic unit of water is heavier in weight than 1 cubic unit of oil. What happens now is that the buoyant force equal to the weight of the displaced water acts upon the oil molecules with greater force than gravity due to its comparatively lighter density causing the oil to rise up and float on the surface of water. It must also be noted that along with oil and water, any two liquids with varying density if put together, will cause the liquid with lesser density to float on the surface of the liquid with higher density, as per the laws of physics.
Without similar electric polarity, two liquids cannot dissolve into each other under normal circumstances and that is another reason why water and oil never mix. Water is a polar compound, but oil is not, it is an organic compound. As water and oil have different dipole moments, therefore their molecules do not attract each other and thus the inability to dissolve into each other. Although most oil types do not dissolve into water, the surface of the water is altered by the layer of oil floating on it. The change may not be chemical in nature but it does not allow light or air to pass through into the water properly and changes the visual appearance as well. It is for this reason that oil spills on the ocean results into the death of so many marine creatures and is deemed as an ecological disaster.