As well, you are not constantly on the gas when you are on the highway, and when you are coasting, new engines do not spray gas into the engine to keep it moving since the transmission and wheels turning keep the engine going, so you are only using gas part of the time.
On surface streets (internal roads), you have to stop and go and change speed much more often. When you accelerate you use more gas than you normally do when cruising, and you rev your engine higher as the car shifts up between the gears, so you may be going from 1,000 to 3,000 rpms while accelerating. Also, when the car is idling, it needs to spray a little gas into the engine to keep it turning over since the transmission and gears aren't moving.
Basically its a combination of covering more ground with less effort on the highway. Even with increased wind resistance, your mpg will be better on a highway up to a point. if you go fast enough, the wind resistance and drag on the car will decrease the mpg you get.
plus you're not driving as fast.
if you drive fast, you're getting more miles per gallon because your engine is working as hard to drive as when you're driving slow but when you drive fast, you get more miles.
oh, and momentum, which relates to the whole stop and go.
a simple way of seeing this is to take a midget and a giant in a race. if both the midget and giant are running as fast as he/she can, and since the giant takes much bigger steps (longer distance per motion/step) the giant will get more distance with the same amount of steps.
One of the basic laws of physics is that it takes energy to change the momentum of an object. Momentum is basically just the mass (think weight) of an object (your car) times its speed. So when you have to speed up your car (like from a stop light), you have to put in some more energy (think gasoline). When you have to slow down, you lose that energy that you just put in by heating up your brake pads (watch those dollars fly away!)
On the freeway, you don't have to change speed a lot so you save gas not having to put energy in and then lose it in your brake pads. Of course even if you never change your speed on the freeway, you still have to put energy in because there is a lot of friction always trying to slow down your car (wind resistance, tires on the road, bearings not being perfect, etc.)
Some of these answers hinted about the efficiency of engines and speed. This is true up to a point, and the point is for most cars around 45mph. After that, the wind resistance increases so much that it offsets some of these speed gains (wind resistance goes up quickly with speed - double your speed, and your wind resistance goes up a quadruple amount!) So 55mph will save you gas over going 70mph. I just saw a History Channel show where they said that during WWII, the National speed limit was 45mph in order to save gas for the war effort.
Hope that helps!
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