Water Heaters - dangerous existing vent help please

We moved into this house about a year & a half ago. About a month ago, I started taking a closer look at the way my water heater was installed and, I didn't like what I saw. This is a standard B-vented LP 40 gal water heater and, it is vented via single wall 3" pipe horizontally through a wall. the pipe is routed through a 3" hole through the wall and it is right up against wood. The cover on the flue on the outside of the house is a small louvered job. Here are some photos of the WH and the vent:
http://sallyband.adnetweb.com/ebaypics/WH-top.jpg
http://sallyband.adnetweb.com/ebaypics/ventfar.jpg
http://sallyband.adnetweb.com/ebaypics/ventclose.jpg

I know that I have a problem here and, I can't figure a way out short of an electric water heater. Is there some way I can safely vent this through a wall? I would like to use a direct vent heater but, I also have a space limitation. The existing heater is 48" tall and, that's about as tall as I can go. I have not been able to located a direct or power vented heater that would fit in this space. I would be hugely thankful to anyone who can give me some pro advice here.

Hate to say but turn it off. From the heater around the top of the heater Id say you have no draft and all I can think of is all the carbon Monoxide That is in the home there.
If you cant run B vent pipe out there and up past the roof line . Even a B vent pipe has to clear any wood by 1" all around it .For sure go to a electric water tank right away. Ill bet your insurance would not cover your home there with that vent pipe if you have a fire

That pressure and temp. relief valve isn't code around these parts either! There should be a blow tube going to within six inches of the floor to be legal. I wonder if you have recourse against the previous owner or realators? Was there an inspection before the house was sold?

Pete

The feeling is mutual. Stop using the water heater now.

You will never get the proper draft with two elbows in succession off the draft hood and the vent terminating flush against the wall.

As far as the height issue with a power vented water heater, what is your maximum clearance available?

This is really dangerous. You mentioned B-vent. but of course you do not have B-vent, you have single wall which requires 6" clearance from the wood. You have a fire danger, and it is almost a certainty that you have carbon monoxide flue gases venting into that room.

By the way, is that plastic water pipe, connected directly to the heater? Can't tell from the pic.

It looks like there is plenty of room to put in a taller heater. Of course the vent has to change, but the water pipes could be connected without much difficulty.

You need to turn that water heater off ASAP! You need to get a professional plumber and get that vent and piping fixed correctly. Your family's safety is work more than a few hundred dollars!

A big thanks to all of you who are helping me out of this mess. Based on what you good people are telling me, I think that my only solution might be electric. I see that Bradford White has a direct vent 40 gal model that is 48" tall and vents with a center at 63" (DS1-40S6CX). I could work with this but, there is one more wrinkle. My house has covered 8' porches on all four sides. There is a roof about 3' feet over where the vent would be (a few inches above the existing vent) that covers the top part of the porch. Of course all of the porches are open on all four sides but, I'm thinking that the restricted air flow there in some weather situations might have a negative effect on the water heater's ability to vent correctly and, I suppose too that it might be possible on a really still day for gases to be trapped under the sloping roof. To answer one question, it does have plastic pipe going in and out of the heater. If you all agree that my conclusions are sound, I guess that my next question would be ask for a good, safe replacement. I live way out in the boonies here in Illinois but, I will drive whatever distance I have to to get a new one. One thing's for sure - I can't let the sun set tomorrow without a new one in place. Thanks again for all the help.

Dont know how far????? But Home depot and Lowes would have one today.

I'm a little confused by your post? Electrics have no vents! Sears also has electric heaters in stock. Be sure you get the correc wire and local disconnect for the 220 Volts required for the electrical service, and the proper relief valve and blow tubing! Might be worth pulling a permit for the work to make sure it's covered by your insurance afterwards...