As a general rule, essential oils with the exception of a very few should ALWAYS be diluted when applied to the skin.
When used with a nebulizer, essential oils should NEVER be diluted with carrier oils, because these are thicker and will clog the nebulizer. When diffused essential oils can only be mixed with other essential oils.
1% Dilution = 5 to 6 drops of essential per ounce of a carrier oil (lotion, oil, butter, etc)
2% Dilution = 10 to 12 drops per ounce...
3% Dilution = 15 to 18 drops per ounce ...
... and so on up to 10 percent blends.
Neat (undiluted) application should be reserved for extremely acute situations such as a minor cut or scrape or carefully dabbing on a blemish. Neat use of essential oils on a regular basis is not recommended as it may cause sensitization and skin irritation.
What Percentage Should I Use?
1% is used for sensitive skin, young people, old people, anyone with a compromised immune system, or just to be safe in case the person you are blending for is sensitive to scents.
2% is used for everyday use in lotions, body oils, room or body sprays, and baths.
3% - 10% for acute situations where you will only be using the blend on a small area of the body and/or for no longer than 2 weeks, such as remedy blends for headaches, sprains and bruises, nausea, cold and flu chest rubs, and so on. Reserve these high dilution blends for specific cases and only if they're recommended by a professional.