From June 1988 to August 1990 twelve tall, high-performance, current meter moorings measured the Gulf Stream's velocity and temperature fields at nominal depths of 400 m, 700 m, 1000 m, and 3500 m along three lines centered at 68°W. The overall eddy variability during the 26-month experiment was dominated by six large amplitude trough formation events, with each event lasting approximately one month. To determine the source(s) of energy for this eddy variability, the eddy energy budget is evaluated. Traditionally, the baroclinic conversion of mean potential energy to eddy potential energy is defined as a downgradient heat flux. However, because a nondivergent heat flux can be downgradient even under conditions in which there is no barolinic conversion occurring, a better, more dynamically correct definition of a baroclinic conversion rate is a downgradient horizontally divergent heat flux. The horizontally divergent heat flux component is estimated to be approximately half the full horizontal heat flux vector. Nevertheless, the resulting “dynamical” baroclinic conversion rate is found to be positive and nearly an order of magnitude larger than the weakly positive barotropic conversion rate. Because the large troughs at 68°W are formed through a baroclinic conversion process, the Gulf Stream jet is judged to be baroclinically unstable at 68°W.