Combine the peppers, garlic, onions, salt and oil in a non-reactive saucepan over high heat. Saute for 3 minutes. Add the water and continue to cook, stirring occasionally, for about 20 minutes, or until peppers are very soft and almost all of the liquid has evaporated. (Note: this should be done in a very well-ventilated area!) Remove from the heat and allow to steep until mixture comes to room temperature. In a food processor, puree the mixture for 15 seconds, or until smooth. With the food processor running, add the vinegar through the feed tube in a steady stream.
Taste and season with more salt, if necessary. (This will depend on the heat level of the peppers you use as well as the brand of vinegar used.) Strain the mixture through a fine mesh sieve and then transfer to a sterilized pint jar or bottle and secure with an airtight lid. Refrigerate. Let age at least 2 weeks before using. Can be stored in the refrigerator for up to 6 months.
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Recipe from Emeril Lagasse
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