Rear Gears for gas mileage

Sounds like you have a tuning problem more than anything else. The rear gear might be making things worse, but you should be getting better mileage than that unless you're running 4.56's and I would expect you'd notice that.

The '68 340 in my Duster is .060 over, 9.8:1 compression, 308 heads with 2.02/1.60 valves stage II ported and flowing 264 cfm @.500", has a lunati 60404 so .513/.533 and 234 int./242 exh. duration at .050, 750 Holley double pumper with mechanical secondaries, eddy air gap rpm intake, 20* initial timing with 34* all in mechanical (no vacuum advance), 4 speed and 3.55's with 26" tall tires. Engine should be around 400hp, but I haven't had it on a dyno.

I've done as well as 15mpg on the freeway, and typically I get around 12 mpg range around town. It was down in the 8-10 range, but that was before I hooked up my wideband AFR gauge and improved the tuning. Considering I don't run any vacuum advance and I've got a 750 DP on it there should still be room to improve a little even from my numbers.