If a tankless heater requires higher Btus, doesn this mean it uses more gas?
No. The amount of energy or Btus required to heat water is the same. A simple way of explaining this is when you boil a pot of hot water on your stove. If you were to boil two identical pots of water, but one is on high heat and the other on low heat, the amount of Btus required to boil the water is exactly the same. The only difference is the amount of time it takes for the water to boil. So think of the tankless water heater as the high heat and the tank water heater as the low heat. The energy savings comes in where tankless water heater has a higher energy efficiency and only turns on to heat water when you need it. Whereas a tank water heater is less energy efficient and wastes gas by regularly heating the water in the tank to maintain the set temperature.