The student pilot was on a local flight for about 45 minutes. When he tried to accelerate, the airplane did not attain full power of 6100 RPM. The maximum was 4000 RPM followed by a further drop to 2200 RPM. He tried to regain power by applying the choke, priming the engine, switching magnetos, and turning off non-essential power, but all were unsuccessful. He tried to land on a road; however, during touchdown he observed two persons approaching him, one on a bike, and the other in a car. He tried to avoid hitting them and veered to the right side of the road, but he collided with a street sign and telephone pole. Examination of the airplane by the FAA included an engine run and inspection of the fuel system. According to the FAA, the engine operated at 6100 RPM for a duration of 5 minutes. The loss of power could not be duplicated. There was 6 gallons of fuel on board and appeared to have oil mixed with gas.