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Something I have noticed after I changed out the water pump and radiator, my fuel mileage has dropped a good amount and the engine also runs cooler now. My MPG's are down from 17-18 to 12-10. The temp gauge used to atleast hit the N in normal. Now the needle doesn't get near that spot.

I thought after a oil change and new fuel filter my fuel mileage might pick up a tick or so or stay the same. Not drop. I keep the truck under 2000 rpms and hardly ever go above 60 mph.

I am wondering if I have the wrong thermostat and its causing the engine to run cooler, resulting in less efficient combustion?

New T-sat was put in when I replaced the water pump. The link is to the T-stat I purchased.

Murray Caps & Stats 4269 - Standard Thermostat 1997 Ford F-250 | O'Reilly Auto Parts
 

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No point in the 203 unless you want more heat or like hearing the fan run.

It sounds like you might have a bad t-stat. Pull it out and hit it with a heat gun or pan of hot water to see if it moves. My guess is it's stuck open. Also, the factory gauge is just a fancy idiot light. It has a few positions that correspond to a range of temperatures.
 
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