I am now 100% sure my thermostat is failing. Once reaching 'operating temp' according to my gauge, OBC tells me the temp fluctuates between 74-88 on the freeway and 88-91 when idling or driving at low speeds. That explains why my average mileage is 18.5 mpg a tank.
1999 Techno Violet Metallic BMW M3
2005 Audi B6 S4 quattro 6MT
2004 BMW 330i
1986 BMW 535i