diff --git a/vendor/github.com/coreos/butane/base/util/url.go b/vendor/github.com/coreos/butane/base/util/url.go
index 2cf3bef070..b7bc035924 100644
--- a/vendor/github.com/coreos/butane/base/util/url.go
+++ b/vendor/github.com/coreos/butane/base/util/url.go
@@ -24,9 +24,24 @@ import (
 	"github.com/vincent-petithory/dataurl"
 )
 
-func MakeDataURL(contents []byte, currentCompression *string, allowCompression bool) (uri string, gzipped bool, err error) {
+func MakeDataURL(contents []byte, currentCompression *string, allowCompression bool) (uri string, compression *string, err error) {
 	// try three different encodings, and select the smallest one
 
+	if util.NilOrEmpty(currentCompression) {
+		// The config does not specify compression.  We need to
+		// explicitly set the compression field to avoid a child
+		// config inheriting a compression setting from the parent,
+		// which may not have used the same compression algorithm.
+		compression = util.StrToPtr("")
+	} else {
+		// The config specifies compression, meaning that the
+		// contents were compressed by the user, so we can pick a
+		// data URL encoding but we can't compress again.  Return a
+		// nil compression value so the caller knows not to record a
+		// translation from input contents to output compression.
+		compression = nil
+	}
+
 	// URL-escaped, useful for ASCII text
 	opaque := "," + dataurl.Escape(contents)
 
@@ -53,10 +68,10 @@ func MakeDataURL(contents []byte, currentCompression *string, allowCompression b
 			return
 		}
 		gz := ";base64," + base64.StdEncoding.EncodeToString(buf.Bytes())
-		// Account for space needed by "compression": "gzip".
-		if len(gz)+25 < len(opaque) {
+		// Account for space needed by the compression value
+		if len(gz)+len("gzip") < len(opaque) {
 			opaque = gz
-			gzipped = true
+			compression = util.StrToPtr("gzip")
 		}
 	}
 
diff --git a/vendor/github.com/coreos/butane/base/v0_3/translate.go b/vendor/github.com/coreos/butane/base/v0_3/translate.go
index cf8763423f..2f7fabd4f7 100644
--- a/vendor/github.com/coreos/butane/base/v0_3/translate.go
+++ b/vendor/github.com/coreos/butane/base/v0_3/translate.go
@@ -150,15 +150,15 @@ func translateResource(from Resource, options common.TranslateOptions) (to types
 			return
 		}
 
-		src, gzipped, err := baseutil.MakeDataURL(contents, to.Compression, !options.NoResourceAutoCompression)
+		src, compression, err := baseutil.MakeDataURL(contents, to.Compression, !options.NoResourceAutoCompression)
 		if err != nil {
 			r.AddOnError(c, err)
 			return
 		}
 		to.Source = &src
 		tm.AddTranslation(c, path.New("json", "source"))
-		if gzipped {
-			to.Compression = util.StrToPtr("gzip")
+		if compression != nil {
+			to.Compression = compression
 			tm.AddTranslation(c, path.New("json", "compression"))
 		}
 	}
@@ -166,15 +166,15 @@ func translateResource(from Resource, options common.TranslateOptions) (to types
 	if from.Inline != nil {
 		c := path.New("yaml", "inline")
 
-		src, gzipped, err := baseutil.MakeDataURL([]byte(*from.Inline), to.Compression, !options.NoResourceAutoCompression)
+		src, compression, err := baseutil.MakeDataURL([]byte(*from.Inline), to.Compression, !options.NoResourceAutoCompression)
 		if err != nil {
 			r.AddOnError(c, err)
 			return
 		}
 		to.Source = &src
 		tm.AddTranslation(c, path.New("json", "source"))
-		if gzipped {
-			to.Compression = util.StrToPtr("gzip")
+		if compression != nil {
+			to.Compression = compression
 			tm.AddTranslation(c, path.New("json", "compression"))
 		}
 	}
@@ -288,15 +288,15 @@ func walkTree(yamlPath path.ContextPath, ts *translate.TranslationSet, r *report
 				r.AddOnError(yamlPath, err)
 				return nil
 			}
-			url, gzipped, err := baseutil.MakeDataURL(contents, file.Contents.Compression, !options.NoResourceAutoCompression)
+			url, compression, err := baseutil.MakeDataURL(contents, file.Contents.Compression, !options.NoResourceAutoCompression)
 			if err != nil {
 				r.AddOnError(yamlPath, err)
 				return nil
 			}
-			file.Contents.Source = util.StrToPtr(url)
+			file.Contents.Source = &url
 			ts.AddTranslation(yamlPath, path.New("json", "storage", "files", i, "contents", "source"))
-			if gzipped {
-				file.Contents.Compression = util.StrToPtr("gzip")
+			if compression != nil {
+				file.Contents.Compression = compression
 				ts.AddTranslation(yamlPath, path.New("json", "storage", "files", i, "contents", "compression"))
 			}
 			ts.AddTranslation(yamlPath, path.New("json", "storage", "files", i, "contents"))