"Rule of thumb is the more mods ( Power ) you add to a car the less your MPG will be."
Unfortunately, it's not that simple. What hurts mileage is when the engine is modded in a way that it becomes less efficient in the rpm range where you operate on the street most of the time. Most naturally aspirated mods shift the power and torque rpm peaks up the rpm range. While the engine is making more power overall, it's usually making less power and torque below 2500-3000 rpm than it did before the mods. And most street operation occurs below 3000 rpm -- that's why many modded naturally aspirated cars get worse mileage.
It can be avoided or even improved, but you have to be really careful. I wasn't interested in building a bunch more peak power - the stock HO had plenty of beans for my needs. I did want to lighten the car though so aluminum heads were a must for me. And I wanted to mod in a way where we didn't lose any power or torque over the stocker through the entire rpm range. We were successful at that - a big piece of credit for that accomplishment goes to Buddy Rawls who did my custom cam. It makes at least 270 lb-ft of torque from about 1600 rpm all the way to 5000. And I've got about 55 more HP at peak than stock. My car weighs about 3270 lbs. with me in it (190 lbs.). It's got 3.73 gears with a shorter tire than the Stang - kind of like a Stang with 3.90 gears. And, well there's no way around it, the Volvo's aerodynamics are comparable to a brick's. Nevertheless, I consistently get 16-19 mpg around town, and 23-25 on the highway (best single tank of 26.8mpg). It ain't 35mpg, but for the performance level I've got available to me, it's pretty good gas mileage. And with 8K-10K miles on the mods, after consistently checking fuel mileage, it's PICKED UP about 1mpg from when it was stock on both the highway and in town. You can mod without significantly impacting mileage, but you have to be thoughtful about it.
Supercharging and turbocharging (like additional compression ratio) usually improve the efficiency of an engine - so better mileage (if you keep your foot out of it) is not uncommon in milder applications.
