The Water Heating  in your house accounts for about 10 – 20% of your annual energy costs. Water heaters are usually located in the basement, garage or some other non-heated utility section of the house, the difference in temperature between the desired water temp (120-140 Degrees f) and surrounding temp is why there can be such a great stress on energy usage. If the outside of your water heater feels warm to touch, then you are loosing efficiency through lack of insulation. Modern Water Heaters are insulated so they wont emit as much heat, but older Water Heaters can be aftermarket insulated using a ‘Water Heater Wrap Blanket’, this insulation keeps the heat locked in and especially when hot water is not being used it reduces the amount of energy the system uses (around 15%) to maintain the water body’s temperature.  Wrap Blankets cost $15-$30 and are very easy to install.