I have a 95 powerstroke and a 99 powerstroke. I always get around 20 mpg out of my 95 and always get around 15 mpg out of my 99. Both of them have the same mods (str8 pipes, edge EZs and, K&Ns). I just assumed the newer powerstrokes (99-03) got worse mileage than the 94-97 powerstrokes.
I have owned several other powerstrokes of other model years and the first generation powerstrokes always seemed to get better mileage. I figured it to be the smaller injectors and smaller power outputs in the first gen's.
After some time I have found some interesting things about the powerstroke and fuel economy.
Some of the early first gen trucks have the 203 degree thermostat and that helps them get better drivability and mileage. The newer powerstrokes have been outfitted with the 195 degree thermostat and that makes them run cooler. I have heard that makes them run slightly too cool. My 95 has the 203 degree thermostat and my 99 has the 195. That could be why my 99 gets worse mileage.....or at least one of the reasons. I am going to put a 203 deg stat in my 99 and see if I can get any better numbers and will post the results!!!
When I first bought my 99 it had 305 size tires on it and I would get around 11 mpg. It also had a cat and muffler. I put stock size tires and deleted the cat and muffler and got the mpg up to 15 just by doing that.
I know this is long winded but.....
My mpg seems to get worse toward the last thousand miles on my 5000 mile oil change interval. I will get 12-14 mpg on the last thousand miles or so and then I change the oil and filter and will get back up to 15-17 mpg range.
I cant say this for sure but, I wouldn't try anything else until you have changed your oil, oil filter, and fuel filter. If you want to delete your cat converter and/or muffler or at least think about a exhaust upgrade to a high flow cat/muffler, I would do that too. When I cut my cat conv off and looked through it....I couldnt believe how big of a restriction it was. Also, changing to a stock or closer to stock tire size would help in mpg as well. Short trips to work and in and around town will kill the mpg numbers as well.
Also, you said you have a lot of 5 mile trips to work and back. In five miles the motor doesnt spend very much time in optimum operating temperature which is where it is most efficient. That could be a factor as well.