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Allegedly chain-drive gears are something like 99% efficient when well oiled and something like 98% efficient when without oil.

Personally I do not like the noise a dry chain makes, this has a 'I must be going slow' psychological effect on my riding so, even if I am not going slow, I think that I am. For this reason I never drive with a dry chain.

If the efficiency gains of an oiled chain are minor then that means the main reason for oiling the chain is to reduce wear/prevent rust rather than efficiency/speed. This is why I would like to know the efficiency of a chain when oiled as well as dry.

Comparisons against other drive mechanisms and their efficiency, e.g. bicycle shaft drive, automatic car transmission are also of interest to put the oiled/dry chain in context.

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Indeed, the primary purpose is surely to prevent the chain seizing which does then have an effect on efficiency. –  Colin Newell Jun 10 '11 at 9:11
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up vote 6 down vote accepted

If the efficiency gains of an oiled chain are minor then that means the main reason for oiling the chain is to reduce wear/prevent rust rather than efficiency/speed. This is why I would like to know the efficiency of a chain when oiled as well as dry.

As explained in the IHPVA paper linked in moz's answer, apparently lubricating the chain makes little difference for efficiency, so yes, it's mainly to "reduce wear/prevent rust".

However, you should note that the IHPVA paper apparently used a new chain in mint condition. It may well be that the lubrication does not make a difference in this case. Still, an unlubricated chain will corrode much faster than a lubricated one, and corrosion does make a huge difference in efficiency (as it increases internal friction).

So in practice, lubrication include efficiency, though indirectly (by preventing corrosion).

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This IHPVA research paper suggests that oil does not help with efficiency: http://www.ihpva.org/HParchive/PDF/hp50-2000.pdf

This question discusses efficiency for hub gears vs derailleurs and links to research: What's the efficiency of hub gears compared to derailleurs?

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