You need to get a new mechanic.
That engine has a sender mounted on the engine and a wire goes to the dash.
To know for sure, get a new mechanic, and have him unscrew the sender on the engine and install a direct reading gauge.
On a cold start you will have close to 50psi and hot 6-20psi. Hot at 1800rpms you will have about 35-40psi.
You probably have a bad sender, or gauge. If the direct reading gauge reads correct, then call Monaco Natl Parts (877-466-6226) and order a sender and gauge.
You should have 2 oil gauges on your '96. One in the area with the filters and one on the dash. You also have 2 senders. If the one in the filter area is reading correct switch the wires on the senders in the engine area and see if the problem moves. If it does not you have a bad dash gauge. If it moves the problem you have a bad sender.
PS you probably have a CAT 3126 engine
CAT 3126 Owners Forum