British Columbia: What's wrong with Blue Spruce?

I had this little tree in the container and on SE balcony for 2 years now. It was doing well but this spring myself and others noticed it wasn't looking it usual self.
I'm not sure if it's a result of drying up in the winter although Vancouver winters are rather soggy, or something else - the browing branches on the bottom going all the way up.

Someone suggested to shake the branches over the paper towel and see if it got any bugs, e.g. mites. I got some little green bugs on the paper as a result. I'm not sure if they are eating the tree and if so what can I do to help it?
Do I need any incecticide and if so what would be the name to buy stuff locally, say, at Home Depot, Canadian Tire, Lowes?
I also read it might be some fungus, if so - what do you suggest one would need to do next?

I haven't fertilized the tree, that might be a drawback as well.....

Any advice is much appreciated.

 

Spruce aphids. Blue spruce here on the west side of the mountains get buggy and go bare inside all the time - I would never plant one for this reason.

 

Hmmmm... Thanks!