Question about Insulating hot water (copper) pipes
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I would loosen the bands. Use a pry bar on the top of the heater between the heater and wall, pry it away from the wall/pipe, stick a piece of wood/board between the heater and the wall. Unscrew the pipe from the wall, insulate it, and screw it back into the wall. Then use the pry bar on the heater to remove the wood/board and tighten the bands.
Be sure and use fibreglass insulation, rather than rubber.A small piece of batt insulation will be fine. The heat from the vent will present a fire hazard for the rubber or any flammable material. Also be sure not to loosen the attachment point for the vent to the heater itself. That could create a carbon monoxide hazard.
We had our hot water tank placed very far away from where the water was required also and wasted a lot of water running it it for the hot. Best thing we did was actually move the tank close to where it was needed. Immediated drop in water waste therefore less work on the water pump too and electrical savings were recouped first year of use. This is if you can move yours. Honestly, has saved so much on energy and water the minor inconvenience i
There are actually electric water heaters that can be placed in the cabinets that have the fawcets. I had the same problem. I found that I wasted 2.5 gallons getting the hot to the kitchen. I installed a 2.5 gallon electric water heater in the crawl space. within three feet of the island and 10 feet of the main sink. Always have hot.
This is all I've ever seen anyplace I've lived here in canada. As you see it can be easily cut so if you just cut it back so that the insulation covers at least halfway round of that pipe. It would be better than nothing. Hope it helps!