But with gear oil, those smelly additives are actually more functional than anything. Even under normal wear, gears risk boundary lubrication, a condition where the protective oil film between moving metal surfaces becomes extremely thin. So, no, the gear oil hasn't gone bad or started leaking; that smell is simply a byproduct of its formulation. New gear oil naturally has a pretty pronounced odor as it is, but standard operating conditions can make it even more pungent (not to mention the passage of time). You should only really take it as a cause for concern if there's a sudden or dramatic change in smell.