The story of Hsiaoyukeng's geology has a direct relationship with the hot water, which takes minerals out of the rock. Together the hot water and sulfur gas loosen the volcanic rock until finally the mountainsides collapse under the assault of rain and earthquakes. This is how the Hsiaoyukeng valley was formed.
小油坑的地質故事其實和熱液換質作用（熱水將岩石內的礦物質帶走，改變岩石成份的作用）有直接的關係，不過它的熱水和硫氣對岩石的換質作用進行得更徹底，以致連火山岩的核心也被換質而結構鬆散，自然禁不起大雨及地震的衝擊，沿著山坡及河溝崩落，就逐漸形成今日的小油坑。