Confused by air intake and flue setup

Jeff you are mis-interpreting
My concern as stated above was having a suction draw from that air intake directly from and within the closed cabinet itself.
There is no pvc extension at all to even the outside of the cabinet.

That is where my main concern is.

The water heater is a high eff model so I am not worried about back drafting.

Bob, it looks like you have a louvered front panel? A cat 1 would not have a sealed combustion chamber!

Ok then you are saying the intake being in the cabinet would have no (negative ) effect? Pun intended.

I wonder if it it obeys the 0ne square inch per 1,000 btu rule?:neutral:

As long as the room it is in meets the room volume L X W X H divided by 50 X 1000 = BTU

Bob, you have other issues, that damper is to close to he draft inducer,I am sure the MFG of the unit more than likely called for it to be farther/further away from the draft inducer blower, the way the unit is installed looks bad.