There are two types, and the one that creates a pillar of flames has three segments, while the exploding type is two segments tall and always appears on an isolated platform.
Interestingly, these look very similar to the oil drums which appear in the NES game Wrecking Crew, which was also made by Nintendo R&D1, the team that made Balloon Kid, Balloon Fight, and the Game & Watch Balloon Fight. The connections don't end there, however, as there are unused graphics of what appear to be an enemy that resembles an Eggplant Man from Wrecking Crew.
Function EditOil Drums only appear in the last stage, but they appear frequently. The first type of Oil Drum creates a slowly rising pillar of fire, and then when it reaches a maximum height, the pillar's height resets. The second type will not create any fire, but if the player comes close to it, it will explode and shoot out particles that can pop Alice's Balloons.