While most pilots will never have to worry about working with liquid oxygen, using any supplemental oxygen source still increases the concentration levels and consequently the risks involved. Operating these systems with an abundance of caution, even if skipping the lip balm seems excessive, is the best way to mitigate risk of fire. Oxygen is colorless and odorless, so we may not even be aware of an oxygen leak until it's too late, as was the case in the May 2016 accident of EgyptAir Flight MS 804 when a pilot lit a cigarette, triggering an explosion that destroyed the aircraft and killed everyone aboard. Ultimately, the unpredictability of combustion in an oxygen-concentrated environment is the real danger, so eliminating as many identifiable risks as possible is always the safest bet, though the chances of your lip balm or pomade going up in flames is beyond slim.
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