A heat budget for Oregon coastal waters during the summer upwelling season in 1973 is estimated from current and temperature measurements at a distance of 15 km from the Oregon coast. In this heat budget, the time-averaged onshore-offshore circulation transports heat offshore at an estimated rate of 4.5¿104 cal cm-1 s-1. This offshore heat transport is compensated by a combination of onshore eddy heat flux, alongshore variation of alongshore heat transport, radiative heat gain by coastal waters, and cooling of coastal waters during summer. Of these mechanisms, the eddy heat flux is most important, balancing 40% of the offshore heat transport by the mean circulation. The eddy heat flux is directed down the mean horizontal temperature gradient and thus removes potential energy from the mean circulation. Removal of energy by eddies is estimated to be 70% of the energy put into the water column by the wind stress acting on the surface current. By removing energy from the mean circulation, eddies provide a mechanism limiting the magnitude of the alongshore circulation in Oregon coastal waters.