
Preheat oven to 375ºF.
Heat 4 tablespoons of the butter and oil in a skillet and add onions. Cook until golden and soft (not brown), shaking the pan occasionally. Drain, saving the liquid.
Liberally butter a 2-quart baking dish. Put in a layer of potatoes, followed by a layer of onions. Season with salt and pepper. Continue to make layers of potatoes and onions, seasoning the layers, and end with a top layer of potatoes. Season with more salt and pepper, and dot with remaining butter.
Pour on the liquid from the onions and just enough water to reach the top of the potatoes.
Bake about 30 or 40 minutes, until the liquid has been absorbed and the potatoes test tender with a fork.