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You probably do not have an EGR, though this kind of behavior you can get from one that is stuck. Feels almost like a stumble where it is going to stall out.
I have seen the 40 psi number aswell..... Im not sure about the high volume oil pump though but maybe if you install a high volume its also a good idea to get a deeper pan for more capacity and up the weight Ive seen talk on weight already and it seems 30wt is the perferred. I lived in kansas city and i ran 50wt yearround and never had a problem on my 68 f-100 some times it was 20-40 inthe coldest times. I dont know if that would keep from washing the bearings or not just an idea. I say if your gonna for go the time to pull an engine out and fix something go a little extra to ensure you wont be pulling it out a couple monthes down the road.
You also have the option of installing a real oil guage temporarily to check the performance of the oiling system. If it's fine then return it to stock. A far cry better than guessing wrong and burning up the motor.
My mustang has both idiot lights and guages and they are all operational.
The idiot light is most likley working properly. I prefer to call it "the low oil pressure warning lamp". I would diagnose the light first, then the actual pressure using a calibrated direct reading guage. FWIW, those aftermarket gages have caused me more problems than any warning light. I always pull all those aftermarket gages off and toss them. Better to have a nice bright warning light than a gage sneaking down slowly. A bonus is no additional wiring, plastic tubing, connectors and holes in the dash. IMHO!
Idiot lights are supposed to come on at about 3 PSI. The symptoms you describe are typical of a worn engine with excessive bearing clearances.
I always have both gauges and idiot lights as well. The light can get your attention if you're not watching the gauge, but I'll not trust my engine to one. They aren't called "idiot lights" for nothing. If I should see a red light, I'd immediately look at the gauge to see what's happening.
Scroob, I'd accept your "diagnosis", except for the fact that the engine was completely rebuilt two years ago, and doesn't have more than 25,000 miles on it.
Again, bottom line, if you aren't trusting what the light is trying to tell you then you are just guessing without installing a real pressure gauge (even if just temporarily). If you do beleive the light then you have a low pressure problem. It could be worn bearings. It could also be a plugged oil pump pickup or a mispositioned pickup. It could also be a oil gallery plug that has fallen out, wasn't installed, or started leaking and is allowing a pressure drop. If you're using a fram oil filter try a Wix or NAPA and see if it helps.
Has this light thing started recently or has it been going on since the rebuild? Did you have it rebuilt or buy it with a fresh rebuild?
Dont know if this means anything but i noticed on alot of FE's (old) ones the the rear oil drain holes can sometimes get clogged....mine were that way when i first got my truck it same problem, but then again that would cause a little bit of smoking too.
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