The “hypoxic drive” theory dominated ICU circles for quite some time as an explanation for why some chronic CO2 retainers experience increased CO2 levels while given supplemental oxygen. According to this theory, in these patients, hypoxemia is the primary stimulus for keeping ventilation at the appropriate level. When supplemental oxygen is given, the stimulus to keep up the ventilation is diminished, and CO2 rises.
It turns out the hypoxic drive may not be (or at least not the only) mechanism involved. Lungs react to hypoxia by shutting down the blood flow to the diseased areas by hypoxic vasoconstriction. When oxygen is given, hypoxic vasoconstriction is off, and blood is allowed to flow through poorly ventilated areas, causing an increase in dead space ventilation and, consequently, CO2 levels.
Regardless of the mechanism, remember never to deprive a hypoxic patient of supplemental oxygen out of fear of CO2 retention.