By increased gas mileage, I meant better MPG (miles per gallon). Again, the reason is the wheels are turning less often in overdrive as compared to a lower gear (1st, 2nd, or 3rd). Thus, to achieve a given MPH the engine can/will be at a lower speed (RPM). Thus, if the engine is performing fewer revolutions but achieving the same MPH, then less fuel is consumed (i.e. better MPG) because there are fewer engine cycles occurring over a given period of time. Typically, a truck that is used for towing will have a higher numerical rear axle gear ratio (e.g. 4.10 vs 2.73). If the transmission and the tires remain constant, then a car with 2.73 rear axle gears might only require 1200 RPM’s to achieve 60 MPH in overdrive whereas a car with 4.10 rear axle gears will require 1700 RPM’s to achieve 60 MPH. Thus, for every minute spent traveling at 60 MPH the car with 4.10’s will have 1700 revolutions vs 1200 for the car with 2.73’s, or 250 more cycles (500 / 2). Thus, more fuel is consumed.
It is funny, I am on many different automotive performance enthusiast boards, and there are always misconceptions about fuel economy. Fuel economy is directly related to how much fuel the motor consumes. I know that sounds stupid, but most people don’t think about how simplistic it really is. Modern cars (I should say car manufacturers) have the burden of meeting EPA emission regulations. As such, the desired Air-to-Fuel ratio is 14.7:1. A modern Electronic Fuel Injection engine can run much leaner (less fuel) while cruising down the highway. If one knows how to manipulate the computer controlling the engine, then you can command leaner fuel mixtures. Thus, less fuel is consumed and MPG improves. :) The risk being that leaner fuel mixtures are detrimental to engines when they placed under load. The proper A/F is critical for thermal management. You can easily run a modern EFI engine at 16:1 with no load cruising down the highway (straight road, no hills, no high headwind, etc). If you tried to run the motor at wide open throttle (lots of load) with an A/F of 16:1, you would probably only get to do so once as the motor (particularly the pistons) would melt.
This leads me to my point about using overdrive when towing. What I meant when stating that overdrive is not desirable because most engines don’t have sufficient power is that most engines do not have enough power to sustain a given MPH when conditions change (a slight grade, headwind increases, or even a turn). Thus, the car’s computer tells the transmission to downshift (i.e. go from overdrive, 4th, down to 3rd gear). In a modern car’s computer, there are a couple of conditions that must be met for the computer to command the transmission to shift to a different gear (either up or down). Typically, these conditions are primarily based on speed (MPH), RPM, and throttle position. So, the computer actually manages the gear shifts for you. You are correct in that you would get worse gas mileage (lower MPG) if you always drove around in overdrive. You would find yourself having to push the throttle down farther to achieve your desired acceleration which consumes more fuel. Just put the car in overdrive and let the computer do the shifting.
BTW, in many modern cars with manual transmissions there is a solenoid that forces the driver to shift from 1st to 4th under certain circumstances. The end result is better fuel economy.