Hi Mike,
Below are the most common causes of oil in the air filter housing.
Possible causes Solutions PCV valve stuck closed Replace PVC valve Vacuum leak Find & repair leak (low manifold vacuum) Lead foot Keep foot out of carb (low manifold vacuum/excessive blowby caused by wide open throttle) Stuck rings Re-ring job or engine rebuild (Check compression, dry & wet) Broken rings Re-ring job or engine rebuild (Check compression, dry & wet) Worn rings & cylinders Engine rebuild (Check compression, dry & wet)
Or it could be a combination of any of the above. If compression checks high, with little or no change between wet & dry readings you are good to go. If compression checks low, with little or no change between wet & dry readings you need a valve job. (Hope it's not a holed piston.) If compression checks low, with a large change between wet & dry readings you need to re-ring or rebuild. Check manual for compression readings.
Also, change your air filter to a K&N filter, these filters are meant to be oiled, paper filters are not. One of your other respondents suggested poking holes in your air filter. _Don't_ do it, you will only make the engine wear out faster.
Always use a good quality oil and change it about every 3000 miles ("normal" use), your engine will last longer.
As stated in other responses, _Do Not_ disconnect or block this hose, it's part of your PCV system (smog equipment). If you have excessive blowby, you could blow out your gaskets & seals. If you have excessive vacuum in the crankcase, it could suck in the gaskets, in either case, oil leaks. (Seals are designed to keep oil in and dirt out. However, dirt can be sucked in by too much vacuum in the crankcase. Dirt to wear out the seals & seal surfaces, again oil leaks.)
The filter under the PCV valve, that was mentioned, was used mostly in older engines. Most, if not all modern engines use baffles. These filters were fiber or screen and were cleaned by removing the valve cover and washing the whole thing with solvent.
Note that under low manifold vacuum conditions, the PCV valve is closed and all crankcase gases, including suspended oil particles, are drawn into the air filter housing through the breather filter. So, a minor amount of oil in the filter housing is normal, the less the better.
BigDave