Underwater, kerosene cannot burn. For a fire to burn, oxygen is necessary. When it is underwater, kerosene will no longer have access to air, which is the source of oxygen. Kerosene can, however, burn on top of the water. It will float on water after being lit and continue to burn in oxygen. Because of this, it is not recommended to use water to put out a kerosene fire. Kerosene will probably disperse into little pools of water, where it will continue to burn. Water spreads a fire.