No, live axle wouldn't explain low MPG.
Front hubs in locked position or live axle setup only costs .5MPG, and it is usually less than that.
If you slow down, even on a slight down hill grade, then something is wrong and that would explain low MPG.
If you can have both front wheels off the ground at the same time I would see if you can feel any drag.
Same with rear wheels, both off the ground and spin them.