Did you check the air filter? Are you sure the gauge works? If it's foggy, it may also be broken. Which gauge? There are two, one before and one after the regulator. I always remove the regulator. That way you can get full pressure when you want it. If you need a regulator for something (painting, or a nail gun) use a small regulator in line at the gun. That way you can adjust pressure right where you are working and don't have to walk back and forth to the compressor.
If you do decide to replace parts, it's more likely the reed valve (part #5) although the rings could be worn. I don't know how much the parts cost, but most of these compressors aren't worth the time.
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