When air leaks from the compressor dipstick, it typically indicates a pump problem.
Of course, this compressor problem only relates to those air compressors with an oil sump and and oil fill tube.
The typical oil fill tube cap will often have a dipstick attached, to allow the compressor owner to check the sump oil level.
This is a Campbell Hausfeld compressor oil dipstick with integral oil fill tube cap.
If your air compressor has a sight glass to display the sump oil level, it will still have a cover on an oil fill tube, and though that cover will not typically have a dipstick attached, it will have a vent hole. Air could be leaking from the vent hole.
A non-lube or oil free air compressor will not have either an oil fill tube or a dipstick.
Air Leaks From The Compressor Dipstick
Where is the air that is leaking from the compressor dipstick coming from?
Since the hole in the dipstick cover is there to allow air into the sump, it stands to reason that it will allow air out.
What keeps the compressed air out of the sump is the piston seal. The piston seal wipes up and down the inside of the pump cylinder, keeping much of the sump oil out of the compression chamber on top of the piston, and, keeping most of the compressed air from bypassing the piston seals and getting into the sump where… yes indeed, it will vent out of the compressor oil dipstick.
Air & Oil Always Bypasses the Piston Seal(s)
It’s almost impossible for the piston seal to stop the migration of a little bit of oil up into the pump compression chamber and via the air stream down into the tank. That’s typically the colored part of the water that you drain from the tank regularly.
It is also impossible for the piston seal to stop a little air from migrating down into the tank and out the oil fill dipstick.
In order to completely stop migration, either the seals would have to be so tight that the pump would not cycle properly, or the manufacturing cost would drive the compressor cost out of folk’s reach.
The Issue is the Amount of Air / Oil
If the amount of air coming out of the oil fill dipstick vent is noticeable, that indicates a problem.
If the amount of oil coming out of the tank drain is excessive, that indicates a problem.
The problem in both cases is that the piston seal or seals are worn to the point where lots of air or oil is bypassing those seals.
Your response is to replace the piston seal sooner rather than later, before the seals are completely gone, and you have metal-to-metal contact inside the pump. Once your piston starts scoring the cylinder wall, you’ve now got a much more expensive repair.