Water can only get to 100C before it boils (usually anyway – ambient pressure affects this value – up a mountain it’ll be lower).
Once water hits 100C all the remaining energy is being used to turn the water to steam, so the pot never gets any hotter.
Oil meanwhile can get up to about 300C before it boils, so it’s capable of bringing things up to a temperature they’ll fry at while still remaining liquid.
The “fried” taste/texture/look is due to the maillard reaction. It’s a reaction between carbohydrates and proteins at high temperatures. It’s what makes food look and taste so good. The Maillard reaction occurs between 280-330F. Under 280F, nothing will happen, over 330F you start to burn/char stuff. So you want the temp in that sweet spot.
When you boil water, it can only get up to 212F. Liquid water doesn’t go much hotter than that. You can add salt and sugar and other stuff to increase the boiling temp, but even supersaturated salt water boils at 225F. So for practical reasons, water just can’t get hot enough to “fry” things.
Oils on the other hand, can get much hotter. Vegetable oil can be stably heated up to about 400F before the oil starts to burn. Lard (IMO the best thing to fry in) gets up to about 380F before burning. Because those things can get up to the temps required for the maillard reaction, it’s possible to fry foods in them.
They can get to a much higher temperature before they boil, whereas water boils off much sooner. As the liquid boils it can’t reach a higher temperature. Frying is the result of heating something up a lot and very quickly, which produces a different result than heating it up a lot but not as quickly (like an oven), or boiling, which is heating it up less and for a longer time.
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