Heat the vegetable oil in a medium pot over medium heat. Add the onion and garlic and cook until the onion is golden, 6 to 7 minutes. Add the tomato sauce, 1 cup water, the vinegar, ketchup, brown sugar, molasses, Worcestershire sauce, tomato paste, mustard, garlic powder and 1 teaspoon salt. Bring to a boil, then reduce the heat to medium low and simmer until the onion is tender, about 15 minutes. Stir in the liquid smoke. Strain the sauce, pressing on the solids to extract any liquid.