When I owned a Toyota Tercel, I was told that if the engine temperature is not hot enough that the engine will not perform at its best. I now own a Subaru Forester and about the time that the temperature gauge dropped out of the middle range (even on days that are not that cold), my mileage seemed to get worse.
I have plenty of heat inside the passenger compartment, maybe even too much. I am wondering if I need a new thermostat, and if replacing it would help my engine performance and fuel efficiency.
You either have a defective thermostat (sticking open?) or a defective (inaccurate) temperature gage. It does not take much heat to warm your car, especially in a temporate climate.
I would have both checked out by a competent mechanic.
Ditto to what Doc said.
And know that neither fix is costly. Proceed promptly.
…and yes, if you do need a new thermostat (which is likely) it will help fuel efficiency.
I’d change the 'stat if it’s more than 4 years old anyway.