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I have a gas water heater and recently found that I do not get more than 5min of hot water. Previously I would be able to take a half hour shower. I see no leaks around water heater. It also seems that the water heater is always running.

What could be causing this?

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What is the air temperature like near the heater? How old is the heater? When was the last time the heater was serviced? What is the water like in your area (well, public, hard, etc.)? –  Tester101 Jan 23 '13 at 12:45
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2 Answers

Check your faucet aerators. If they caught little white bits of plastic, then your tank's dip tube has failed. The dip tube is what brings the cold water to the bottom of the tank to be heated, leaving the hot water on top. If it has failed, you will only get hot water for about 5 minutes. Replacing the dip tube itself is not hard, but depending on how the dip tube has crumbled, cleaning the tank of all the plastic bits is a pain.

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Good point, but not all models of gas water heater allow you to change this I thought? Besides, if the water heater is 10 years or older then it is probably not worth the hassle. –  maple_shaft Jan 23 '13 at 13:24
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More than likely what is happening is that there is an accumulation of rust and water deposit that formed on the bottom of the water heater tank and this is inhibiting the transfer of heat from the exchanger to the water.

There should be a drain on the bottom of your water heater that you should regularly drain the water from it. This should be done every couple of years to prevent such problems.

Turn off your water heater temporarily, attach the end of a hose to the bottom drain and run the other end to a floor drain or nearby slop sink. Open the drain valve to help try and flush a lot of that sediment out from the bottom. Don't be alarmed if the water looks rusty or grainy, this is normal wear and tear for a water heater.

See if this helps and if not then it is probably time for a new water heater.

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Once it drains fully, leave the valve open and run the water some more. Then close the valve, let it fill up a tiny bit, and empty again. Repeat until the water is clear –  Steven Jan 23 '13 at 14:09
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