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Chalupa - That can definitely be true. The key as to whether stock or modded is better for MPG is whether modded adds low end torque, or moves the powerband up. If the powerband gets moved up too much, you lose MPG. If it gets moved down, or kept mostly the same, with gains both high and low, MPG can go up.
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Call me crazy, but I actually try for mpg with this Jeep:
Typical driving: Back in Rochester for school, driving is 60 - 70% city
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