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Many of your energy dollars can be lost from the top of your water heater. There are continuous convection currents in the pipes right above the water heater. These water currents can draw a lot of heat out of your water heater. Adding some foam pipe insulation in these areas can help a lot.
If you have an older water heater, it probably does not have heat trap fittings in the top where the pipes attach. These inexpensive fittings are one-way check valves that block these energy-robbing convection currents. You can install them yourself or have a plumber install them. Most major plumbing supply outlets should carry sizes to fit most water heaters.
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