Simply put, you cannot protect your API key as long as it remains in the android application. Even if you encrypt the API key somehow, people who reverse engineer your app (decompiling) can retrieve the API key, as your decryption key also needs to be somewhere in the APK (otherwise your app cannot use the API key).
The only solution is to off-load the processing with the API key to your own server, and have a secure way of letting your app communicating with that server (meaning SSL).
That way, you move to a single point-of-failure security-wise (your server) instead of a huge number of mobile apps that can be reverse-engineerd and are difficult to track (different versions installed over time)