Must one use olive oil that is fit for consumption for Chanukah purposes?
I’ve heard this cited in the name of Rav Elyashiv, but edible oil is considerably more expensive.
There is no need to use oil that is marketed as edible, and it is perfectly fine to use the normal oil that is marked for candle-lighting.
The Gemara (Berachos 35b) writes that one recited the Ha-Etz berachah on olive oil, but proceeds to explain that this cannot refer to drinking of olive oil on its own, for this is damaging to the body. This is ruled by the Shulchan Aruch Ha-Rav (202:10) and by the Mishnah Berurah (202:29).
Thus, according to the Gemara there is no “benefit” in drinking olive oil on its own, and one only derives benefit from the oil when using it as a dip (though today some nutritionalists recommend a spoon a day).
The type of olive oil known to the Sages was surely of higher acidity that the type we are used to today, and would doubtless not be approved of for consumption. The olive oil marketed today is likewise not poisonous, but due to its high acidity should not generally be consumed.
Thus, although there is a hiddur of using edible olive oil (as that of the Menorah in the Mikdash), using the olive oil marketed for lighting is fine.
I don’t know about the ruling cited from Rav Elyashiv, and perhaps this is referring to a truly inedible oil.