Butter is made by churning heavy cream. Traditionally the cream was slightly soured before churning - it is easier to make butter from sour cream, it also gives a richer more complex flavoured result. Today this is usually achieved by adding a shot of culture to the butter. When the cream reaches the butter stage an equal quantity of buttermilk separates from the solid butter. To stop the butter going rancid this has to be thoroughly washed out with clean water, the butter is then pressed to expel any remaining water. Salt, which acts as a preservative, is often added to the butter at this stage. It is then formed into the desired shape, wrapped and refrigerated.
Butter consists of butterfat, about 80%, milk solids, around 15% and water. The milk solids in butter start to burn at 120 degrees C, which make butter unsuitable for cooking at higher temperatures.
This happens whether or not oil has been added to the butter.
Clarified butter and Ghee can stand heat up to 200 degrees C. It is made by melting butter removing the casein skin that forms and pouring of the butterfat and discarding the water and milk solids. However, as the milk solids contain much of the flavour, clarified butter has a different taste.