Preheat the oven to 350F (180C) or 325F (170C) on a convection oven (some ovens do this automatically). Line a 12-cavity muffin tin with muffin papers.
In a medium sized bowl, whisk together the flour, nutmeg, baking powder, baking soda and salt. Set aside.
In a large bowl using a stand or hand-held electric mixer, beat the butter and sugar together on medium speed until light and fluffy (about 2-3 minutes).
Mix in the oil and vanilla extract. Then turn off the mixer and scrape down the sides and bottom of the bowl.
Beat in the egg and additional egg yolk. Do not add in 2 full eggs - we're using 1 full egg and just the egg yolk from the second egg.
With the mixer on a low speed, beat about ½ of the flour mixture into the butter mixture.
Then beat in the eggnog starting with the mixer on a low speed. Stop mixing as soon as combined. Scrape down the sides and bottom of the bowl.
Mix in the rest of the flour mixture until you no longer see lumps of flour.
Spoon the batter into the prepared muffin tin, filling each about ½ to ⅔ full. You should end up with about 11-12 cupcakes.
Bake in the preheated oven for about 14-17 minutes, or until the tops look set and an inserted toothpick comes out clean or with a few cake crumbs. There shouldn't be gooey cake batter on the tester.
Cool cupcakes in the pan for about 10 minutes, then carefully transfer to a wire rack to continue cooling.