Your hot water heater thermostat is broken. This may be a dangerous situation. Water only flows in the drop pipe when the pressure in the hot water tank is dangerously high. The water flows out through a pressure relief valve to prevent the tank from exploding.
If you this is what your water heater is doing then turn off your water heater immediately and call a plumber! This may also explain why your gas bill is higher since the hot water heater may be running constantly.
hth, Doug
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