A very meager, slim, or frugal amount of resources, especially money or fuel. As in the phrases "live off/on the smell of an oily rag" or "run off/on the smell of an oily rag," respectively. Primarily heard in Australia, New Zealand. I spent a year travelling abroad, and I lived on the smell of an oily rag to get by. This trusty little car may not look like much, but she runs on the smell of an oily rag.