I have a 1989 Oldsmobile Cutlass. I kept careful record of my gas mileage for several years and got 22 miles a gallon consistently. About 2 years ago the mileage dropped to 16 mpg. In Sept 2012, at 108,000 odometer reading, I had a tune-up with spark plugs, ignition wire set, pcv valve, and fuel filter. Also motorvac pressure cleaning, fuel injection cleaner, drive belt replaced, lube & oil filter, transmission flush, replaced leaking trany cooler line, new battery. In November 2012, at 110,000 odometer reading, seeing no change in mileage, I had the oxygen sensor replaced, air filter box checked for restrictions (ie mice, leaves – found no restrictions) replaced computer temperature sensor and pigtail, rechecked idle (still good). Now, at 112,000 odometer reading, I’m still getting 16 mpg — no improvement whatsoever. (The November repair did, however, correct the window wiper delay. It used to take one mile to stop the wipers after turning them off – now they stop after 2 to 4 swipes!)
Try replacing the thermostat. If the thermostat is stuck open the engine doesn’t reach operating temperature causing it to use more fuel.
Tester
Which thermostat to replace, is there more than one?
This is the thermostat http://www.rockauto.com/catalog/moreinfo.php?pk=48822&cc=1223053 and there’s only one.
Tester
Thanks much, I will try it 
Does the car have as much power as it did when the gas mileage was good?
You state that a transmsission fluid line was repaired and a transmission flush done.
How low was the transmission fluid?
Maybe the fuel economy is slipping because the transmission is too.
So OK; I’m going to throw my favoride wild guess at you. If you have vacuum advance, it could be stuck or the diaphragm is torn. Your distributor is in a bad location but you can check to see if the vacuum line is attached or has come off. Any place can test to see if the vacuum advance holds vacuum but they should remove the distributor cap to see if the thing moves when vacuum is applied. They can even apply vacuum and note the engine speed change. It’s at least a cheap fix.
I believe Tester has it right, but I have to ask how you are measuring your mileage? Some methods are prone to error.
89 cutlas? Ciera? 3100 V6? Port fuel injection? No distributor. Uses crank sensor for timing and computer for ignition functions. Poor mileage is usually a function of bad O2 sensor, leaky injectors, bad Fpr or just tired motor issues, rings, valves.
For a sudden drop in mpg, while there are a dozen things that could cause it, my first guess would be the engine isn’t reaching the designed-for operating temperature, due to a faulty thermostat. I concur w/Tester above, the thermostat should be tested as the first priority. Running the engine at too-low temperatures can cause severe engine damage over time also, so this shouldn’t be ignored for very long.
if i could throw my own guess into the mix. you could have a faulty or skewed map or maf sensor.
whichever you have plays a critical role in the mix of fuel and air going into the engine. the oxygen sensor is also a good guess. it might be worth paying a pro to find the mis-behaving sensor so you don’t pay more for parts you may not need.
The car hasn’t lost any power with the change in gas mileage. The way I track mpg is by writing down the odometer reading every time I get gas. Then record the date, odometer, gallons purchased in a spreadsheet. I haven’t changed the method of calculation, so the comparison should still be accurate
Could it be that the drop in gas mileage started when you first used gas wit ethanol in it?" I had a 92 Plymouth minivan that absolutely hated it. My mileage dropped from a low of 18 before to 14 and 12 on 10% ethanol, My 2002 minivan hardly noticed the difference.
Thank you, Tester. I had the thermostat replaced and have kept mileage on several tanks of gas now – I am now back up to 20 mpg !! I , too, have heard some scary stories about ethanol – to bad we don’t have the choice at the pump.
Thankfully it was a thermostat issue and not related to that transmission fluid loss.
Ethanol is 2 cents a gallon cheaper around here compared to regular unleaded so other than the subsidy game ethanol seems pointless to me.