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Infrared thermometers work very well when measuring the temperature of hot oil. For deep frying it's not a big deal, as standard probe thermometers work fine. But for shallow frying or sauteeing, the IR thermometer does an excellent job at providing the temperature of the oil.
When you use the infrared thermometer to measure the temperature of the colored paper, you are measuring the heat transfer by the emission of electromagnetic waves that carry energy away from the hot object. The radiation is in the infrared region of the electromagnetic spectrum.