Taller and wider tires may have lower rolling resistance (according to that research). However it gets a little more complicated when you add other factors, such as the car gearing. If your car is geared fairly low, you might want to favor taller tires over wider tires, just to get the rpms down. In that case "tall and skinny" might be better. However if your gearing is fairly high, or where you like it, then you might want to go the other way because extra width with constant height does not change the gearing.
I went taller on my old '97 VW Passat TDI (the gearing was too low for my taste). The next change I went taller yet again. This time I ran into handling problems - it didn't feel as settled - and hitting a pothole (on gravel roads) with the wheel turned resulted in snagging the wheel well a couple of times. Fortunately it was a matter of getting a plyers and straightening the metal out again; not visible from the topside. I suppose if you had a nice car this might get distressing, heh, but my car had a lot of miles and it didn't bother me.
I believe both steps going taller added significant mpg even after correcting for the larger tire diameter (that is, lower reported odometer readings). Certainly the first step did.
I probably won't go with taller tires on my current Passat as it is geared nice and high.
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