Is it possible to be in too high of a gear for optimum engine revs and adversely affect MPG? Sometimes, I feel I could keep it a gear lower and not have the engine tugging.

 

Yes it is, and the term is "lugging" the engine, not tugging.. just thought you might want to have that clarified.

Actually, I would be much less worried about fuel economy than other things if I was constantly lugging the engine.. driving in too high a gear for the speed or conditions.

Generally, you tend to get your best mileage if the engine stays in the 2000 -2500 RPM range and is not straining itself.