Think of it this way; if you have a gallon of air at 20% oxygen concentration, then add 25% of inert gas to the mix, letting the combined mix escape to become 1 gallon of mix, you will have:
.20-(.20*(.25*.25))=.1875, or 18.75% oxygen by volume left. This causes early termination of the combustion for lack of oxygen, relative to the fuel load that was mixed by velocity in the venturi, because the pressure drop across the venturi lowers after the EGR starts. This variability in the venturi speeds is what gives the engine it's drop in power when the EGR valve opens, which is usually noticeable unless the valve opens very slowly. Unfortunately, on late 70s versions of the Fairmont I6, the valve opens quite suddenly, being switched into a vacuum cannister by a WOT switch, used in reverse.
If you drive under ideal conditions, on flat, level roads with no acceleration or deceleration, the mix "flattens out" after a few seconds and the oxygen content rises close to normal (19.2%, say the experts, in a 20% environment). But, as soon as you decelerate, it goes momentarily rich, then lean. And as you accelerate, it goes lean (after the acel pump dries out), then the EGR pops open and the oxygen drops off, so leftover, unburned fuel ends up in the exhaust manifold. After settling back into 'steady mode', this balances out again.
Overall, the result is that the cat has to burn off the unburned fuel or it will end up as hydrocarbons in the exhaust. That's what the AIR systems do: add oxygen to the exhaust to burn fuel in the cat. All this unburned fuel is lost power and gas mileage.
Since documentation and experimentation from the period 1970-1988 show losses of 10%-22% in fuel mileage with the old-style emissions controls, it's easy to understand why America had such a fuel shortage during that period. Today we have more cars than ever, but the MPG is better, even on an SUV, than the average family sedan in the mid-to-late 1970s. We actually use less oil per capita now than we did back then.
