A few months ago I got my first car which is 1990 Opel Kadett-E 5-door hatchback with 4-MT and 1.6l naturally aspirated i4 with a single point injection system for about $900. 125k miles. Runs perfectly fine, although some work had to be done. I get about 23mpg on a highway and 16 in the city, however mechanic tells me that I can get much better gas mileage if I get a working oxygen sensor. Is it worth it? (No emissions testing required in my country)
I went through 8 self-replaced O2 sensors on 2 cars in 20+ years. My experience shows, that a properly working oxygen sensor will give you slightly better gas mileage. As far as I know, this is mostly due to the fact that a faulty sensor, as soon as the car ECU detects that it is faulty, sends the ECU into limp mode with non-O2-optimized fuel combustion based on some firmware-default table values, and non-optimized automatically means more fuel consumption vs. optimized. This applies to both O2 sensors bothsides of the catalytic converter.
It helps improve your gas mileage, but make sure you also have checked all other factors as well (correct tire pressure, good spark plugs, air filter,...)