I recently purchased a brand new mountain bike with disc brakes. It's only been a few months of riding and the brakes have stopped working to the extent that I can still ride (with effort) while fully engaging the front brakes. They worked well at first, then became increasingly ineffective as time went on. I did get some oil on them once, but I thoroughly cleaned both pads and rotor with rubbing alcohol. I have constantly tinkered with cable tension and space between the rotors and pads but nothing has made any improvement whatsoever. I even went out and bought new pads which did absolutely nothing to improve stopping power. Are the rotors bad? Should I take it into a repair shop? What should I do to fix this problem?
Once pads are contaminated with oil they are pretty much junk. Cleaning the surface is ineffective as oil gets into the porous pad material. Obviously you have eliminated this problem with new pads - unless the pads are becoming contaminated without you noticing.
To cover all the bases I'd thoroughly clean the levers, rotors and calipers, inspect the levers, cable, housing and calipers for issues, then go through a step-by-step adjustment process, and see if that results in an improvement. Note you may have to re-bed in the pads depending on what you do to the rotors and pads.
There are plenty of videos out there on cleaning bikes, and some on cleaning disc brake in particular.
Check the cables are not frayed, and the housing is secured properly in the levers, calipers and mounts on the forks and frame. Check the pads are wearing evenly. If they are not wearing parallel to the backing plate that indicates a bigger problem and you probably want to go direct to a good local bike repair shop.
Park Tool has a great video on mechanical disc brake adjustment.
If all that does not work, it's time to take it to a good local bike repair shop. A good shop will explain what the problem is and give you some advice on adjustments.