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I have a GE gas dryer (DSXH47GGWW) that is currently next to an exterior basement wall. I'd like to move it to the opposite wall (shared with the crawl space) right next to the water heater next to which is the hot water furnace both of which are also on gas.

However the installation guide says:

2.No other fuel burning appliance shall be installed in the same closet as the GAS DRYER.

I don't have them in a closet; I'm planning to create a room in the basement but my appliances would be outside of that so ventilation should be plenty.

Is this reasonable to do? What are the reasons for not placing fuel burning appliances next to each other (I already got two)?

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There should be no problem locating two gas burning appliances close together as long as you have proper ventilation. The reason your manual says not to put two items is a closet is that they may create excessive heat when used together. As long as you have good spacing, good venting and a source of combustion air, you will be fine.

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    @shirlock - Actually, I think perhaps you are incorrect about the problem being the heat generated. As I understand it, the problem is with the exhaust gasses. If you have two such appliances in the same space, one can draw air backwards through the flue of the other. This will cause those exhaust gases to reenter the home, potentially causing CO problems in your home.
    – user558
    Commented Apr 2, 2011 at 10:24
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    I have a furnace and hot water heater in the same room (electric dryer too) and don't see the issue. The furnace and hot water heater vents join and have a continuous upward slope to prevent any down drafts. There's also an outside vent bringing fresh air into the room.
    – BMitch
    Commented Apr 2, 2011 at 21:56
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    @BMitch - Furnaces and water heaters may well be using external air for their combustion these days. Certainly our current 10 year old furnace does, as well as our fireplace insert. That is not true of our water heater. If they do, then the vent is no issue anyway. Merely having an upward slope is inadequate to prevent backflow when you have a strong fan sucking air out of the room. In our case, a running kitchen exhaust fan was once strong enough to draw flue gases inside the house from a burning fireplace, that was 25 feet away from the kitchen fan. It reversed the air flow in that flue.
    – user558
    Commented Apr 3, 2011 at 10:03
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    @Peter - Much depends on how well is your house insulated and sealed. A tightly sealed house can be a problem with these things. Some older houses leak like sieves. I would strongly recommend the use of a CO detector in the area, to ensure that any problem is caught. CO is NOT something you wish to be breathing. Can the dryer be set up to use an external air source?
    – user558
    Commented Apr 3, 2011 at 10:14
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    I think we're zeroing in on the right answer but are still off. The problem isn't adjacent combusting appliances with gravity vents taking combustion air from the other. If the combustion air allowance is adequate, this will not be a problem. The problem is a gas dryer is essentially a POWER vented appliance, which can very well pull air down another appliance's flue. The appliance needs to be in a large enough room and adequate combustion air needs to be provided. The combustion air isn't connected directly to the dryer, only to it's enclosing room.
    – bcworkz
    Commented Feb 9, 2013 at 20:59
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I've recently had a problem with my gas water heater turning off frequently. When I called the manufacturer, they asked if I had a dryer in the same room. My answer was, "yes, the dryer sits next to the water heater in an open room of the basement." The rep said that was most likely the problem. When hot water heaters are in the same room with dryers, over time lent from the dryers thats just floating in the air can collect on the air intake screen and eventually blocks the air flow to the heater. In turn, the heater will shut itself off as a safety feature.

As I'm not an expert in the field, I don't know if that is the only reason to put distance between a dryer and the hot water heater, but it's something to consider...

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