The 30-second answer: First decide what is leaking. Gas almost always comes from the carburetor bowl — a stuck float, a bad bowl gasket, or a leaking bowl screw — and a fuel leak is a fire hazard you fix before running the machine. Oil usually weeps from the drain plug, the dipstick, or a valve-cover or crankcase gasket. Clean everything dry, run it, and watch where the wet spot comes back.
A puddle under a generator is one of those problems that looks scary and is usually simple. The whole job is figuring out what is leaking and where from. A fuel leak is a genuine fire risk, so I treat gas and oil very differently. Here is how I track each one down.
Step one: is it gas or oil?
Touch it and smell it. Gasoline is thin, evaporates fast, and smells like gas. Oil is slick, dark, and does not evaporate. This one fact tells you which half of this article to read — and a fuel leak means you do not start the engine until it is fixed.
Fuel leaks: start at the carburetor (most common)
The number-one source of a gas leak is the carburetor bowl, and it is almost always one of three things. A stuck float or needle lets fuel keep flowing until it overflows out the bowl vent or down the carb throat — you will often see gas dripping right after you open the fuel valve. Tapping the bowl gently sometimes frees a stuck float; if not, the bowl comes off for a cleaning. A cracked or hardened bowl gasket drips from the seam where the bowl meets the carb body — a new gasket is a couple of dollars. A loose or worn bowl screw/drain drips from the very bottom; snug it or replace the washer.
Other fuel-leak spots: the fuel line where it slips onto the petcock or carb (replace cracked line and use fresh clamps), the fuel valve itself, and the tank seam or shutoff. A roll of fresh small-engine fuel line and a few clamps cover most of these. If the carb bowl keeps overflowing after cleaning, the float needle is worn and the carb needs a rebuild kit or replacement.
Oil leaks: check the easy spots first
Most oil leaks are not blown gaskets — they are loose fittings. Start with the drain plug (snug it, replace the crush washer), the dipstick or oil-fill cap (cross-threaded or missing O-ring), and the oil-fill tube. If the unit is overfilled, the excess will push out the crankcase breather and look like a leak — check that the oil is at the full mark, not above it.
If the easy spots are dry, look at the gaskets: the valve cover, the crankcase mating surface, and the oil seals on the crankshaft. A weeping crankshaft seal usually shows oil flung around the area near the alternator or pull-start. Gasket and seal jobs are doable but involve splitting covers, so weigh the effort against the value of the machine.
The clean-and-watch trick
When I cannot see the exact source, I wipe the whole engine bone dry with a rag and some degreaser, run it for a few minutes (oil leaks only — never with a fuel leak), then shut it down and look for the first fresh wet spot. Oil always travels downward and back, so the highest, most-forward wet point is usually the source, not where it pools.
When to fix it now
Any fuel leak gets fixed before the next start — no exceptions. Gasoline near a hot engine and an electrical generator is exactly how fires start. An oil leak is less urgent but do not ignore it: run the engine low on oil and the low-oil sensor will shut it down, or worse, you will cook the engine. Keep the oil topped to the full line until you close the leak.