<PAGE>
                          FORM 10-Q

              SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, D.C. 20549

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended September 30, 1998

                             OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934.

     For the transition period from _______ to _______.  

               Commission File Number: 1-10398

                   GIANT INDUSTRIES, INC.
     (Exact name of registrant as specified in its charter)


            Delaware                           86-0642718
(State or other jurisdiction of            (I.R.S. Employer
 incorporation or organization)            Identification No.)


     23733 North Scottsdale Road, Scottsdale, Arizona 85255
     (Address of principal executive offices)       (Zip Code)


     Registrant's telephone number, including area code:
                     (602) 585-8888

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                   Yes [X]    No [ ]

Number of Common Shares outstanding at October 31, 1998: 10,838,767 shares.
<PAGE>
<PAGE>
             GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                             INDEX


PART I  - FINANCIAL INFORMATION

Item 1  - Financial Statements

          Condensed Consolidated Balance Sheets
          September 30, 1998 (Unaudited) and December 31, 1997

          Condensed Consolidated Statements of Earnings (Loss) 
          Three and Nine Months Ended September 30, 1998 and 1997 
          (Unaudited) 

          Condensed Consolidated Statements of Cash Flows
          Nine Months Ended September 30, 1998 and 1997 (Unaudited) 

          Notes to Condensed Consolidated Financial Statements
          (Unaudited) 

Item 2  - Management's Discussion and Analysis of
          Financial Condition and Results of Operations

PART II - OTHER INFORMATION

Item 1  - Legal Proceedings

Item 6  - Exhibits and Reports on Form 8-K 

SIGNATURE<PAGE>
<PAGE>
                                 PART I
                         FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

<TABLE>
                                GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (In thousands)

<CAPTION>
                                                            September 30, 1998   December 31, 1997
                                                            ------------------   -----------------
                                                              (Unaudited)
<S>                                                             <C>                <C>
ASSETS

Current assets:
  Cash and cash equivalents                                     $  14,562          $  82,592
  Receivables, net                                                 59,545             57,070
  Inventories                                                      51,962             57,598
  Prepaid expenses and other                                        6,960              7,016
  Deferred income taxes                                             2,800              2,800
                                                                ---------          ---------
     Total current assets                                         135,829            207,076
                                                                ---------          ---------
Property, plant and equipment                                     478,871            402,600
  Less accumulated depreciation and amortization                 (137,149)          (120,773)
                                                                ---------          ---------
                                                                  341,722            281,827
                                                                ---------          ---------
Goodwill, net                                                      22,836             18,363
Other assets                                                       25,478             28,105
                                                                ---------          ---------
                                                                $ 525,865          $ 535,371
                                                                =========           =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt                             $   1,278          $     562
  Accounts payable                                                 44,868             55,546
  Accrued expenses                                                 55,898             39,243
                                                                ---------          ---------
     Total current liabilities                                    102,044             95,351
                                                                ---------          ---------
Long-term debt, net of current portion                            263,532            275,557
Deferred income taxes                                              25,687             25,887
Other liabilities                                                   4,465              5,109
Commitments and contingencies (Notes 5 and 6)                 
Common stockholders' equity                                       130,137            133,467
                                                                ---------          ---------
                                                                $ 525,865          $ 535,371
                                                                =========          =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
                                   GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
                                                 (Unaudited)
                                     (In thousands except per share data)

<CAPTION>
                                                        Three Months Ended          Nine Months Ended
                                                           September 30,              September 30,
                                                    -------------------------   -------------------------
                                                       1998          1997          1998          1997
                                                    -----------   -----------   -----------   -----------
<S>                                                 <C>           <C>           <C>           <C>
Net revenues                                        $   167,461   $   197,358   $   470,191   $   467,619
Cost of products sold                                   119,139       146,333       337,639       344,978
                                                    -----------   -----------   -----------   -----------
Gross margin                                             48,322        51,025       132,552       122,641

Operating expenses                                       26,424        25,037        75,578        59,166
Depreciation and amortization                             7,664         6,834        21,227        17,405
Selling, general and administrative expenses              6,432         3,474        18,484        13,282
Write-off of merger costs                                 1,053                       1,053
                                                    -----------   -----------   -----------   -----------
Operating income                                          6,749        15,680        16,210        32,788
Interest expense, net                                     6,046         4,803        17,454        10,576
                                                    -----------   -----------   -----------   -----------
Earnings (loss) before income taxes                         703        10,877        (1,244)       22,212
Provision (benefit) for income taxes                        282         4,281          (742)        8,817
                                                    -----------   -----------   -----------   -----------

Net earnings (loss)                                 $       421   $     6,596   $      (502)  $    13,395
                                                    ===========   ===========   ===========   ===========
Net earnings (loss) per common share:
  Basic                                             $      0.04   $      0.60   $     (0.05)  $      1.21
                                                    ===========   ===========   ===========   ===========
  Assuming dilution                                 $      0.04   $      0.59   $     (0.05)  $      1.20
                                                    ===========   ===========   ===========   ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
                     GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  (In thousands)
<CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,
                                                                 --------------------
                                                                   1998        1997
                                                                 --------    --------
<S>                                                              <C>         <C>
Cash flows from operating activities:
  Net earnings (loss)                                            $   (502)   $ 13,395
  Adjustments to reconcile net earnings (loss) to net 
    cash provided by operating activities:
      Depreciation and amortization                                21,227      17,405
      Deferred income taxes                                          (200)      5,502
      Other                                                           121         928
      Changes in operating assets and liabilities, 
        net of the effects of acquisitions:
        Increase in receivables                                    (2,349)     (6,895)
        Decrease (increase)in inventories                           7,354      (4,875)
        (Increase) decrease in prepaid expenses and other              (5)         19
        Decrease in accounts payable                              (10,679)     (1,759)
        Increase in accrued expenses                               24,460       4,528
                                                                 --------    --------
Net cash provided by operating activities                          39,427      28,248
                                                                 --------    --------
Cash flows from investing activities:
  Acquisitions, net of cash received                              (38,205)    (46,858)
  Purchases of property, plant and equipment and other assets     (49,825)    (28,821)
  Refinery acquisition contingent payment                          (7,244)     (6,910)
  Proceeds from sale of property, plant and equipment               2,571         330
                                                                 --------    --------
Net cash used by investing activities                             (92,703)    (82,259)
                                                                 --------    --------
Cash flows from financing activities:
  Proceeds from long-term debt                                     18,000     281,600
  Payments of long-term debt                                      (29,309)   (149,563)
  Payment of dividends                                             (2,199)     (1,668)
  Purchase of treasury stock                                       (1,179)     (1,084)
  Deferred financing costs                                            (67)     (3,293)
  Proceeds from exercise of stock options                                          75
                                                                 --------    --------
Net cash (used) provided by financing activities                  (14,754)    126,067
                                                                 --------    --------
Net (decrease) increase in cash and cash equivalents              (68,030)     72,056
Cash and cash equivalents:
  Beginning of period                                              82,592      12,628
                                                                 --------    --------
  End of period                                                  $ 14,562    $ 84,684
                                                                 ========    ========
</TABLE>

Noncash Investing and Financing Activities.  In the second quarter of
1997, the Company exchanged an office building and a truck maintenance 
shop with net book values totaling approximately $1,300,000 and recorded 
$22,904,000 for capital leases as part of the acquisition of ninety-six 
service station/convenience stores from Thriftway Marketing Corp. and 
affiliates (the "Thriftway Assets").

See accompanying notes to condensed consolidated financial statements.<PAGE>
<PAGE>
           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)

NOTE 1 - BASIS OF PRESENTATION:

     The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments and
reclassifications considered necessary for a fair and comparable
presentation have been included and are of a normal recurring nature.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1998. The enclosed financial statements should be
read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.

     In March 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share", which is effective for financial statements for
both interim and annual periods ending after December 15, 1997. The
Company has implemented this Statement and, as required, has restated
earnings per share ("EPS") for all periods presented. This new standard
requires dual presentation of "basic" and "diluted" EPS on the face of
the earnings statement and requires a reconciliation of the numerator
and denominator of the basic and diluted EPS calculations (See Note 2).
Basic earnings per common share is computed on the weighted average
number of shares of common stock outstanding during each period.
Earnings per common share assuming dilution is computed on the weighted
average number of shares of common stock outstanding plus additional
shares representing the exercise of outstanding common stock options
using the treasury stock method.

     In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income", which is effective for fiscal 1998 financial statements for
both interim and annual periods. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their
nature in a financial statement and (b) display the accumulated balance
of other comprehensive income separately from retained earnings and
additional capital in the equity section of a statement of financial
position. The Company has no items of other comprehensive income for the
periods presented in these financial statements. 

     In June 1997, the FASB also issued SFAS No. 131 "Disclosures About
Segments of an Enterprise and Related Information", which is effective
for fiscal 1998. This statement need not be applied to fiscal 1998
interim financial statements. SFAS No. 131 establishes standards for the
way that public enterprises report information about operating segments
in annual financial statements and requires that those enterprises
report selected information about operating segments in interim
financial reports issued to stockholders. It also establishes standards
for disclosures about products and services, geographic areas and major
customers. The Company has not completed evaluating the effects this
Statement will have on its financial reporting and disclosures. The
Statement will have no effect on the Company's financial position or
results of operations.

<PAGE>
<PAGE>
NOTE 2 - EARNINGS PER SHARE:

     As discussed in Note 1, the following is a reconciliation of
the numerators and denominators of the basic and diluted per share
computations for net earnings (loss) as required by SFAS No. 128:

<TABLE>
<CAPTION>
                                                 Three Months Ended September 30, 
                             -------------------------------------------------------------------
                                           1998                               1997
                             --------------------------------   --------------------------------
                                                        Per                                Per
                               Income        Shares    Share      Income        Shares    Share
                             (Numerator) (Denominator) Amount   (Numerator) (Denominator) Amount
                             ----------- ------------- ------   ----------- ------------- ------
<S>                          <C>          <C>          <C>      <C>          <C>          <C>
Earnings per common 
  share - basic              

  Net earnings               $ 421,000    10,972,428   $ 0.04   $6,596,000   11,025,763   $0.60

  Effect of dilutive
    stock options                            111,733                            140,531
                             ---------    ----------   ------   ----------   ----------   -----
Earnings per common share 
  - assuming dilution

  Net earnings               $ 421,000    11,084,161   $ 0.04   $6,596,000   11,166,294   $0.59
                             =========    ==========   ======   ==========   ==========   =====


                                                 Nine Months Ended September 30, 
                             --------------------------------------------------------------------
                                           1998                               1997
                             --------------------------------   ---------------------------------
                                                        Per                                 Per
                                Loss         Shares    Share      Income         Shares    Share
                             (Numerator) (Denominator) Amount   (Numerator)  (Denominator) Amount
                             ----------- ------------- ------   -----------  ------------- ------
<S>                          <C>          <C>          <C>      <C>           <C>          <C>
Earnings (loss) per common 
  share - basic              

  Net earnings (loss)        $(502,000)   10,986,244   $(0.05)  $13,395,000   11,064,597   $1.21

  Effect of dilutive
    stock options                                  *                             118,202
                             ---------    ----------   ------   -----------   ----------   -----
Earnings (loss) per common 
  share - assuming dilution

  Net earnings (loss)        $(502,000)   10,986,244   $(0.05)  $13,395,000   11,182,799   $1.20
                             =========    ==========   ======   ===========   ==========   =====
</TABLE>

*The additional shares would be antidilutive due to the net loss.

     There were no transactions subsequent to September 30, 1998,
that if the transactions had occurred before September 30, 1998,
would materially change the number of common shares or potential
common shares outstanding as of September 30, 1998.


<PAGE>
<PAGE>
NOTE 3 - NOTE RECEIVABLE

     In the third quarter of 1998, the Company loaned $4.0 million to
its Chairman and Chief Executive Officer. This loan is evidenced by an
unsecured promissory note bearing an interest rate of prime plus 2%.
Principal and interest is due and payable in February 1999. This loan
is included in receivables in the Company's Condensed Consolidated
Balance Sheet at September 30, 1998.<PAGE>
<PAGE>
NOTE 4 - INVENTORIES:

<TABLE>
<CAPTION>
                                      September 30, 1998     December 31, 1997
                                      ------------------     -----------------
                                                    (In thousands)
<S>                                       <C>                      <C>
Inventories consist of the following:

First-in, first-out ("FIFO") method:
  Crude oil                               $ 8,270                  $12,736
  Refined products                         17,501                   25,562
  Refinery and shop supplies               10,896                    7,530
  Merchandise                               4,791                    4,640
Retail method:
  Merchandise                               6,826                    5,840
                                          -------                  -------
                                           48,284                   56,308
Allowance for last-in, first-out
  ("LIFO") method                          10,751                    4,220
Allowance for lower of cost or market      (7,073)                  (2,930)
                                          -------                  -------
                                          $51,962                  $57,598
                                          =======                  =======
</TABLE>

     The portion of inventories valued on a LIFO basis totaled
$31,544,000 and $37,714,000 at September 30, 1998 and December
31, 1997, respectively. The following data will facilitate
comparison with the operating results of companies using the
FIFO method of inventory valuation.

     If inventories had been determined using the FIFO method at
September 30, 1998 and 1997, net earnings and diluted earnings
per share for the three months ended September 30, 1998 and 1997
would have been higher (lower) by $351,000 and $(198,000), and
$0.03 and $(0.02), respectively. For the nine months ended
September 30, 1998 and 1997, net earnings and diluted earnings
per share would have been lower by $(1,483,000) and
$(3,562,000), and $(0.14) and $(0.32), respectively. 
<PAGE>
<PAGE>
NOTE 5 - LONG-TERM DEBT:

     In August 1997, the Company issued $150,000,000 of 9% senior
subordinated notes due 2007 (the "9% Notes")and in November 1993, the
Company issued $100,000,000 of 9 3/4% senior subordinated notes due
2003 (the "9 3/4% Notes", and collectively with the 9% Notes, the
"Notes"). The Indentures supporting the Notes contain covenants that,
among other things, restrict the ability of the Company and its
subsidiaries to create liens, incur or guarantee debt, pay dividends,
sell certain assets or subsidiary stock, engage in certain mergers,
engage in certain transactions with affiliates or alter the Company's
current line of business. In addition, subject to certain conditions,
the Company is obligated to offer to purchase a portion of the Notes at
a price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, with the net cash
proceeds of certain sales or other dispositions of assets. Upon a
change of control the Company will be required to offer to purchase all
of the Notes at 101% of the principal amount thereof, plus accrued
interest, if any, to the date of purchase.

     At September 30, 1998, the terms of the Indenture supporting the 
9 3/4% Notes restricted the amount of money the Company could borrow.
This amount is the greater of $40.0 million or the amount determined
under a borrowing base calculation tied to eligible accounts receivable
and inventories as defined in the Indenture. At September 30, 1998,
this amount was approximately $50.0 million . In addition, the Company
is not able to make any restricted payments as defined in the Indenture
as long as the terms of the Indenture are not met. This includes the
payment of dividends and the repurchase of shares of the Company's
common stock. 

     Repayment of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company's direct and indirect wholly-owned
subsidiaries, subject to a limitation designed to ensure that such
guarantees do not constitute a fraudulent conveyance. Except as
otherwise allowed in the Indentures pursuant to which the Notes were
issued, there are no restrictions on the ability of such subsidiaries
to transfer funds to the Company in the form of cash dividends, loans
or advances. General provisions of applicable state law, however, may
limit the ability of any subsidiary to pay dividends or make
distributions to the Company in certain circumstances.

     Separate financial statements of the Company's subsidiaries are not
included herein because the aggregate assets, liabilities, earnings and 
equity of the subsidiaries are substantially equivalent to the assets, 
liabilities, earnings and equity of the Company on a consolidated basis;
the subsidiaries are jointly and severally liable for repayment of the Notes; 
and the separate financial statements and other disclosures concerning the 
subsidiaries are not deemed material to investors.

     The Company has a Credit Agreement (as amended, the "Agreement")
with a group of banks with a maturity date of May 23, 2000. The
Agreement contains a $70.0 million unsecured capital expenditure
facility. On May 23, 1999, the borrowing commitment under the capital
expenditure facility is required to be reduced by $20.0 million. At
September 30, 1998, there were no outstanding balances under this
facility. In addition, the Agreement contains a three-year unsecured
working capital facility to provide working capital and letters of
credit in the ordinary course of business. The availability under this
working capital facility is the lesser of (i) $40.0 million, or (ii)
the amount determined under a borrowing base calculation tied to
eligible accounts receivable and inventories as defined in the
Agreement. At September 30, 1998, the lesser amount was $40.0 million.
There were $4.0 million of direct borrowings outstanding under this
working capital facility at September 30, 1998, and there were
approximately $12.8 million of irrevocable letters of credit
outstanding, primarily to secure purchases of raw materials. At October
31, 1998, there were $14.0 million of direct borrowings and $12.8
million of irrevocable letters of credit outstanding. 

     The interest rate applicable to the Agreement's unsecured
facilities is tied to various short-term indices. At September 30,
1998, this rate was approximately 6.0% per annum. The Company is
required to pay a quarterly commitment fee based on the unused amount
of each facility.

     The Agreement contains certain covenants and restrictions which
require the Company to, among other things, maintain a minimum
consolidated net worth; minimum fixed charge coverage ratio; and
minimum funded debt to total capitalization percentage. It also places
limits on investments, prepayment of senior subordinated debt,
guarantees, liens and restricted payments. The Agreement is guaranteed
by substantially all of the Company's direct and indirect wholly-owned
subsidiaries.

     At September 30, 1998, the Company was not in compliance with
certain covenants in the Agreement. Waivers have been obtained and will
be required on a monthly basis as long as the Company is not in
compliance. In accordance with the terms of the current waiver, no
credit extensions can be made under the Agreement's capital expenditure
facility and credit extensions under the working capital facility may
not exceed $24.0 million, exclusive of letters of credit of
approximately $12.8 million, as long as the Company is not in
compliance with the covenants. The Company is currently in the process
of obtaining a new secured credit agreement with the same group of
banks to replace the Agreement. The new agreement, which will include
revised covenants, is expected to be in place by the end of November
1998. The Company anticipates that the new agreement will increase its
working capital availability and provide certain funds for acquisition
purposes.
<PAGE>
<PAGE>
NOTE 6 - COMMITMENTS AND CONTINGENCIES:

     The Company and certain subsidiaries have been named as defendants
to various legal actions. Certain of these pending legal actions
involve or may involve claims for compensatory, punitive or other
damages. Litigation is subject to many uncertainties, and it is
possible that some of these legal actions, proceedings or claims could
be decided adversely. Although the amount of liability at September 30,
1998 with respect to these matters is not ascertainable, the Company
believes that any resulting liability should not materially affect the
Company's financial condition or results of operations.

     Federal, state and local laws and regulations relating to health
and the environment affect nearly all of the operations of the
Company. As is the case with other companies engaged in similar
industries, the Company faces significant exposure from actual or
potential claims and lawsuits involving environmental matters. These
matters include soil and water contamination, air pollution and
personal injuries or property damage allegedly caused by substances
manufactured, handled, used, released or disposed of by the Company. 
Future expenditures related to health and environmental matters
cannot be reasonably quantified in many circumstances due to the
speculative nature of remediation and clean-up cost estimates and
methods, imprecise and conflicting data regarding the hazardous
nature of various types of substances, the number of other
potentially responsible parties involved, various defenses which may
be available to the Company and changing environmental laws and
interpretations of environmental laws.

     The United States Environmental Protection Agency notified the
Company in May 1991 that it may be a potentially responsible party
for the release or threatened release of hazardous substances,
pollutants, or contaminants at the Lee Acres Landfill (the "Landfill"),
which is owned by the United States Bureau of Land Management (the 
"BLM") and which is adjacent to the Company's Farmington refinery. 
This refinery was operated until 1982. Although a final plan of action
for the Landfill has not yet been adopted by the BLM, the BLM has 
developed a proposed plan of action, which it projects will cost 
approximately $3,900,000 to implement. This cost projection is based 
on certain assumptions which may or may not prove to be correct, and 
is contingent on confirmation that the remedial actions, once 
implemented, are adequately addressing Landfill contamination. For 
example, if assumptions regarding groundwater mobility and 
contamination levels are incorrect, the BLM is proposing to take 
additional remedial actions with an estimated cost of approximately 
$1,800,000. Potentially responsible party liability is joint and 
several, such that a responsible party may be liable for all of the 
clean-up costs at a site even though it was responsible for only a 
small part of such costs. Based on current information, the Company
does not believe it needs to record a liability in relation to the
BLM's proposed plan.

     The Company has established an environmental liability accrual of
approximately $2,800,000. Approximately $800,000 relates to ongoing
environmental projects, including the remediation of a hydrocarbon
plume at the Company's Farmington refinery and hydrocarbon
contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining amount of approximately
$2,000,000 relates to an original estimate of approximately
$2,300,000, recorded in the second quarter of 1996, of certain
environmental obligations assumed in the acquisition of the Bloomfield
refinery. The environmental accrual is recorded in the current and
long-term sections of the Company's Condensed Consolidated Balance
Sheets.

     The Company has received several tax notifications and
assessments from the Navajo Tribe relating to crude oil and natural
gas removed from properties located outside the boundaries of the
Navajo Indian Reservation in an area of disputed jurisdiction,
including a $1,800,000 severance tax assessment issued in November
1991. The Company has invoked its appeal rights with the Tribe's Tax
Commission in connection with this assessment and intends to oppose
the assessment. It is the Company's position that it is in substantial
compliance with laws applicable to the disputed area and, therefore,
the Company has accrued a liability in regards thereto for
substantially less than the amount of the original assessment. It is
possible that the Company's assessments will have to be litigated by
the Company before final resolution. In addition, the Company may
receive further tax assessments.<PAGE>
<PAGE>
NOTE 7 - ACQUISITIONS AND MERGER:

     On February 10, 1998, the Company completed the purchase of the
assets of DeGuelle Oil Company and the stock of DeGuelle Enterprises
(collectively "DeGuelle") for $9.75 million. DeGuelle is a Durango,
Colorado-based petroleum marketing company. Included in the purchase
were seven service station/convenience stores, two cardlock commercial
fleet fueling facilities, a gasoline and diesel storage bulk plant and
related transportation equipment. All of the facilities are located in
southwestern Colorado and are supplied by the Company's refineries. In
1997, DeGuelle had sales of approximately 10.0 million gallons of
gasoline and diesel fuel in addition to 35,000 gallons of lubricants.

     In June 1998, the Company completed the acquisition of seventeen
service station/convenience stores from Kaibab Industries, Inc.  In
addition, one other unit was leased under an operating lease
arrangement for a period of two years. An additional fifteen units
were acquired in July 1998. Related equipment, fuel truck/transports,
fuel inventories and undeveloped real estate were also acquired. The
retail units, located throughout Arizona, include fifteen in the
greater Phoenix area and eleven in the Tucson market, with the balance
located primarily in southern and eastern Arizona. These units had
sales of approximately 70.0 million gallons of refined petroleum
products for the fiscal year ended September 30, 1997. Goodwill of
approximately $4.3 million was recorded in connection with the
acquisition of these service station/convenience stores and will be
amortized over twenty years.

     On April 14, 1998, the Board of Directors of the Company approved
an Agreement and Plan of Merger (the "Merger Agreement") whereby Holly
Corporation ("Holly") would be merged with and into Giant (the
"Merger"). The Merger was subject to various conditions stated in the
Merger Agreement. On September 1, 1998, Giant and Holly mutually
agreed to terminate the proposed Merger after considering various
factors, including the inability of the companies to reach a
satisfactory resolution of concerns expressed by the Federal Trade
Commission relative to the possible impact of the Merger on portions
of the market served by the companies and uncertainty caused by a
lawsuit filed against Holly by Longhorn Partners Pipeline, L.P.  In
the quarter ended September 30, 1998, the Company wrote off
approximately $1,053,000 of costs incurred in connection with the
proposed Merger. These costs were primarily for fees paid to
investment bankers, attorneys, accountants and regulatory agencies,
and printing and distribution costs related to documents delivered to
shareholders. The Company anticipates that additional costs may be
billed or incurred in connection with the terminated Merger, but does
not expect that they will be significant.
<PAGE>
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

EARNINGS (LOSS) BEFORE INCOME TAXES
-----------------------------------
     For the three months ended September 30, 1998, earnings before
income taxes were $0.7 million, a decrease of approximately $10.2
million from earnings before income taxes of $10.9 million for the
three months ended September 30, 1997. The decrease is primarily due
to (i) a 25% decline in refinery margins; (ii) reductions in 1997
third quarter expenses to bring certain estimated liabilities in line
with expected levels; (iii) increased operating and administrative
expenses primarily related to the acquisition of various service
station/convenience stores and related assets from DeGuelle Oil
Company and DeGuelle Enterprises (the "DeGuelle Assets") in February
1998 and from Kaibab Industries, Inc. (the "Kaibab Assets") in June
and July 1998 (collectively, the "1998 Acquisitions"); (iv) increased
interest costs primarily related to the issuance of $150.0 million of
senior subordinated notes in August 1997; and (v) a write-off of costs
incurred in connection with the terminated merger with Holly
Corporation. These items were offset in part by earnings from the 1998
Acquisitions. 

     For the nine months ended September 30, 1998, the Company
incurred a loss before income taxes of $1.2 million, a decrease of
approximately $23.4 million from earnings before income taxes of $22.2
million for the nine months ended September 30, 1997. The decrease in
earnings for the nine month period is primarily due to (i) a 21%
decline in refinery margins, partially related to non-cash charges for
reductions in the carrying value of inventories of approximately $4.2
million; (ii) increased interest costs related to (a) the issuance of
$150.0 million of senior subordinated notes in August 1997 to finance
the acquisition of various service station/convenience stores and
related assets from Thriftway Marketing Corp. and affiliates (the
"Thriftway Assets"), the DeGuelle Assets, the Kaibab Assets and
Phoenix Fuel Co., Inc. ("Phoenix Fuel") (collectively, the
"Acquisitions"), and (b) capital lease obligations recorded in
connection with the Thriftway Assets; (iii) increased operating and
administrative expenses primarily related to the Acquisitions and
planning for future growth; (iv) a decrease in refinery sourced sales
volumes of approximately 4%, due in part to a major maintenance
turnaround at the Ciniza refinery in the second quarter of 1998; (v)
reductions in 1997 third quarter expenses to bring certain estimated
liabilities in line with expected levels; and (vi) a write-off of
costs incurred in connection with the terminated merger with Holly
Corporation. These items were offset in part by earnings from the
Acquisitions.

REVENUES
--------
     Revenues for the three months ended September 30, 1998, decreased
approximately $29.9 million or 15% to $167.5 million from $197.4
million in the comparable 1997 period. The decrease is primarily due
to a 27% decline in refinery weighted average selling prices and a 24%
decrease in the selling price of fuel for Phoenix Fuel. These
decreases were offset in part by an 8% increase in third party fuel
volumes sold by Phoenix Fuel and merchandise sales related to the 1998
Acquisitions.

     For the quarter, volumes of refined products sold through the
Company's retail units increased approximately 38% from 1997 levels
primarily due to the 1998 Acquisitions, along with a 2% increase in
the volumes of finished product sold from the Company's other retail
operations, largely due to a 30% increase in the volume of finished
product sold from the Company's travel center. The increased travel
center volumes are due in large part to improved marketing programs
put in place during 1997. Volumes of finished product sold from the
Company's service station/convenience stores, other than the 1998
Acquisitions, declined approximately 2% due to the closure or sale of
twenty-one Thriftway units. The remaining units recorded nominal
increases.

     Revenues for the nine months ended September 30, 1998, increased
approximately $2.6 million or 1% to $470.2 million from $467.6 million
in the comparable 1997 period. The increase is primarily due to the
Acquisitions, offset in part by a 26% decline in refinery weighted
average selling prices and a 4% decrease in refinery sourced finished
product sales volumes.

     For the nine month period, volumes of refined products sold
through the Company's retail units increased approximately 46% from
1997 levels primarily due to the Thriftway, Kaibab and DeGuelle
Assets, along with an 9% increase in the volumes of finished product
sold from the Company's other retail operations, largely due to a 34%
increase in the volume of finished product sold from the Company's
travel center. The increased travel center volumes are due in large
part to improved marketing programs put in place during 1997.

COST OF PRODUCTS SOLD
---------------------
     For the three months ended September 30, 1998, cost of products
sold decreased $27.2 million or 19% to $119.1 million from $146.3
million in the corresponding 1997 period. The decrease is primarily
due to a 30% decline in average crude oil costs and a 22% decrease in
the cost of fuel sold by Phoenix Fuel. These decreases were offset in
part by an increase in third party fuel volumes sold by Phoenix Fuel
and merchandise sales related to the 1998 Acquisitions. 

     For the nine months ended September 30, 1998, cost of products
sold decreased $7.4 million or 2% to $337.6 million from $345.0
million in the corresponding 1997 period. The decrease is primarily
due to a 30% decline in average crude oil costs and a 4% decrease in
refinery sourced finished product sales volumes. These decreases in
costs were offset in part by increases in costs related to the
Acquisitions. In addition, 1998 cost of products sold increased as a
result of a reduction in the carrying value of inventories related to
a decline in crude oil and refined product prices.

OPERATING EXPENSES
------------------
     For the three months ended September 30, 1998, operating expenses
increased approximately $1.4 million or 6% to $26.4 million from $25.0
million for the three months ended September 30, 1997. The increase is
primarily due to the 1998 Acquisitions and payroll and related costs
associated with expanded retail operations. The increase was offset in
part by a decrease in repair and maintenance expenses at the Ciniza
refinery because of higher costs in the 1997 third quarter related to
projects in progress during that period.

     For the nine months ended September 30, 1998, operating expenses
increased approximately $16.4 million or 28% to $75.6 million from
$59.2 million for the nine months ended September 30, 1997.
Approximately 96% of the increase is due to the Acquisitions. For the
Company's other operations, 1998 costs increased primarily due to
payroll and related costs because of general wage increases and
expanded retail operations.

DEPRECIATION AND AMORTIZATION
-----------------------------
     For the three months ended September 30, 1998, depreciation and
amortization increased approximately $0.8 million or 12% to $7.6
million from $6.8 million in the same 1997 period. Approximately 50%
of the increase is due to the 1998 Acquisitions. The remaining
increases are primarily related to construction, remodeling and
upgrades in retail, refining and transportation operations; and the
amortization of 1997 Bloomfield refinery turnaround costs.

     For the nine months ended September 30, 1998, depreciation and
amortization increased approximately $3.8 million or 22% to $21.2
million from $17.4 million in the same 1997 period. Approximately 65%
of the increase is due to the Acquisitions. The remaining increases
are primarily related to construction, remodeling and upgrades in
retail, refining and transportation operations; and the amortization
of 1997 Bloomfield refinery turnaround costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
     For the three months ended September 30, 1998, selling, general
and administrative expenses ("SG&A") increased approximately $2.9
million or 85% to $6.4 million from $3.5 million in the corresponding
1997 period. The increases are primarily the result of higher 1998
third quarter expenses for payroll and related costs, outside services
and other costs, in large part due to the Acquisitions and planning
for future growth. In addition, 1997 SG&A was reduced by adjustments
to certain accruals for estimated liabilities for self insured
workmen's compensation and property and casualty claims to bring them
in line with expected levels. 

     For the nine months ended September 30, 1998, SG&A increased
approximately $5.2 million or 39% to $18.5 million from $13.3 million
in the corresponding 1997 period. Approximately 15% of the increase is
due to SG&A associated with the operations of Phoenix Fuel. The
remaining increases are primarily the result of higher 1998 payroll
and related costs, outside services and other costs, in large part due
to the Acquisitions and planning for future growth, along with
increased expenses for estimated contributions to employee stock
ownership and 401(k) plans. These increases were partially offset by a
$1.0 million decrease in management incentive bonus expense in the
1998 period as compared to the 1997 period. In addition, 1997 SG&A was
reduced by adjustments to certain accruals for estimated liabilities
for self insured workmen's compensation and property and casualty
claims to bring them in line with expected levels.

WRITE-OFF OF MERGER COSTS
-------------------------
     On April 14, 1998, the Board of Directors of the Company approved
an Agreement and Plan of Merger (the "Merger Agreement") whereby Holly
Corporation ("Holly") would be merged with and into Giant (the
"Merger"). The Merger was subject to various conditions stated in the
Merger Agreement. On September 1, 1998, Giant and Holly mutually
agreed to terminate the proposed Merger after considering various
factors, including the inability of the companies to reach a
satisfactory resolution of concerns expressed by the Federal Trade
Commission relative to the possible impact of the Merger on portions
of the market served by the companies and uncertainty caused by a
lawsuit filed against Holly by Longhorn Partners Pipeline, L.P. In the
quarter ended September 30, 1998, the Company wrote off approximately
$1.1 million of costs incurred in connection with the proposed Merger.
These costs were primarily for fees paid to investment bankers,
attorneys, accountants and regulatory agencies, and printing and
distribution costs related to documents delivered to shareholders.

INTEREST EXPENSE, NET
---------------------
     For the three months ended September 30, 1998, net interest
expense (interest expense less interest income) increased
approximately $1.2 million or 26% to $6.0 million from $4.8 million in
the comparable 1997 period. The increase is primarily due to
additional interest expense related to the issuance of $150.0 million
of senior subordinated notes in August 1997 and a decrease in interest
and investment income in the 1998 period due to a decrease in excess
funds available for investment. The increase was partially offset by a
reduction in 1998 interest expense due to lower direct borrowings
from, and interest rates related to, the Company's credit facilities
and a reduction in capital lease obligations recorded in connection
with the purchase of the Thriftway Assets in May 1997. The effects of
fluctuations in interest rates applicable to invested funds were
nominal.

     For the nine months ended September 30, 1998, net interest
expense increased approximately $6.9 million or 65% to $17.5 million
from $10.6 million in the comparable 1997 period. The increase is
primarily due to additional interest expense related to the issuance
of $150.0 million of senior subordinated notes in August 1997. This
increase was partially offset by a reduction in 1998 interest expense
due to lower direct borrowings from, and interest rates related to,
the Company's credit facilities and higher interest and investment
income resulting from an increase in excess funds available for
investment due to the issuance of the senior subordinated notes. The
effects of fluctuations in interest rates applicable to invested funds
were nominal.

INCOME TAXES
------------
     The provision for income taxes for the three months ended
September 30, 1998 and the three and nine months ended September 30,
1997, along with the income tax benefit for the nine months ended
September 30, 1998 were computed in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, resulting in an
effective tax rate of approximately 40% for the 1998 three month
period, a 60% benefit rate for the 1998 nine month period and a 39%
effective tax rate for the comparable 1997 periods. The difference in
the effective tax/benefit rates is primarily due to deferred tax
adjustments and certain tax credits available to the Company in 1998.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW FROM OPERATIONS
-------------------------
     Operating cash flows increased in the first nine months of 1998
in relation to the comparable 1997 period primarily as the result of
changes in working capital items, offset in part by a decline in net
earnings. Net cash provided by operating activities totaled $39.4
million for the nine months ended September 30, 1998, compared to
$28.2 million provided by operations in the comparable 1997 period. 

WORKING CAPITAL
---------------
     Working capital at September 30, 1998 consisted of current assets
of $135.8 million and current liabilities of $102.0 million, or a
current ratio of 1.33:1. At December 31, 1997, the current ratio was
2.17:1 with current assets of $207.1 million and current liabilities
of $95.4 million.

     Current assets have decreased since December 31, 1997, primarily
due to a decrease in cash and cash equivalents and inventories, offset
in part by an increase in receivables. Inventories have decreased
primarily due to a decrease in pipeline and onsite crude oil volumes
(i) resulting in part from reductions in local crude oil production
due to lower crude oil prices and (ii) the return to more normal
operations at the Ciniza refinery following a major turnaround in the
second quarter of 1998. In addition, terminal and refinery onsite
finished product volumes have declined, due in part to the Ciniza
refinery turnaround. Also contributing to lower inventory values was a
decline in crude oil and refined product prices. These decreases were
offset in part by an increase in refinery material and shop supply
inventories and the volume of retail finished product inventories. The
latter resulting from recent service station/convenience store
acquisitions. Receivables have increased primarily due to a note
receivable from the Company's Chairman and Chief Executive Officer.
Current liabilities have increased due to an increase in accrued
expenses, offset in part by a decrease in accounts payable. Accrued
expenses have increased primarily due to an increase in federal excise
taxes payable at September 30, 1998, as a result of a one time request
from the federal government that taxpayers delay payment of such taxes
until October 1998. These taxes were paid in the first week of
October. The increase in accrued expenses was offset in part by
payments made for a contingency incurred in connection with the
acquisition of the Bloomfield refinery, management incentive and other
bonuses and ESOP and 401(k) contributions. Accounts payable have
decreased primarily as a result of a decline in the cost of raw
materials. 

CAPITAL EXPENDITURES AND RESOURCES
----------------------------------
     Net cash used in investing activities for the purchase of
property, plant and equipment and other assets, excluding business
acquisitions, totaled approximately $49.8 million for the first nine
months of 1998. Expenditures included amounts for the Ciniza refinery
second quarter turnaround, refinery and transportation equipment and
facility upgrades, capacity enhancement projects for the refineries,
construction costs for a products terminal, construction costs for two
new retail units, acquisition of land for future retail units and
continuing retail equipment and system upgrades.

     On February 10, 1998, the Company completed the purchase of the
assets of DeGuelle Oil Company and the stock of DeGuelle Enterprises
(collectively "DeGuelle") for $9.75 million. DeGuelle is a Durango,
Colorado-based petroleum marketing company. Included in the purchase
were seven service station/convenience stores, two cardlock commercial
fleet fueling facilities, a gasoline and diesel storage bulk plant and
related transportation equipment. All of the facilities are located in
southwestern Colorado and are supplied by the Company's refineries. In
1997, DeGuelle had sales of approximately 10.0 million gallons of
gasoline and diesel fuel in addition to 35,000 gallons of lubricants.

     The Ciniza refinery began a major, every four year, maintenance
turnaround in mid-April 1998 that was completed in early June 1998,
approximately twenty days beyond the anticipated completion date. The
delay in returning to normal operations was due to a number of
factors, including but not limited to, unexpected mechanical repairs
encountered, problems related to a key contractor and a number of
startup problems. During this turnaround, the major operating units at
the refinery were inspected and necessary repairs and maintenance
performed. The work plan was based on extending the frequency of major
turnarounds from four to five years. In addition to the repair and
maintenance procedures, certain other procedures were performed that
are expected to increase reformer capacity from 6,700 bbls per day to
7,300 bbls per day. The expansion of the reformer increases the
Company's ability to produce high-value products, provides flexibility
in gasoline conversion and increases the refinery's capability to
process condensate.

     In June 1998, the Company completed the acquisition of seventeen
service station/convenience stores from Kaibab Industries, Inc.  In
addition, one other unit was leased under an operating lease
arrangement for a period of two years. An additional fifteen units
were acquired in July 1998. Related equipment, fuel truck/transports,
fuel inventories and undeveloped real estate were also acquired. The
retail units, located throughout Arizona, include fifteen in the
greater Phoenix area and eleven in the Tucson market, with the balance
located primarily in southern and eastern Arizona. These units had
sales of approximately 70.0 million gallons of refined petroleum
products for the fiscal year ended September 30, 1997. Goodwill of
approximately $4.3 million was recorded in connection with the
acquisition of these service station/convenience stores and will be
amortized over twenty years.

CAPITAL STRUCTURE
-----------------
     At September 30, 1998 and December 31, 1997, the Company's
long-term debt was 66.9% and 67.4% of total capital, respectively. The
Company's net debt (long-term debt less cash and cash equivalents) to
total capitalization percentages were 65.7% and 59.1% at September 30,
1998 and December 31, 1997, respectively.

     The Company's capital structure includes $150.0 million of 9%
senior subordinated notes due 2007 (the "9% Notes") and $100.0 million
of 9 3/4% senior subordinated notes due 2003 (the "9 3/4% Notes", and
collectively with the 9% Notes, the "Notes"). The Indentures
supporting the Notes contain covenants that, among other things,
restrict the ability of the Company and its subsidiaries to create
liens, incur or guarantee debt, pay dividends, sell certain assets or
subsidiary stock, engage in certain mergers, engage in certain
transactions with affiliates or alter the Company's current line of
business. In addition, subject to certain conditions, the Company is
obligated to offer to purchase a portion of the Notes at a price equal
to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, with the net cash proceeds
of certain sales or other dispositions of assets. Upon a change of
control the Company will be required to offer to purchase all of the
Notes at 101% of the principal amount thereof, plus accrued interest,
if any, to the date of purchase.

     At September 30, 1998, the terms of the Indenture supporting the
9 3/4% Notes restricted the amount of money the Company could borrow.
This amount is the greater of $40.0 million or the amount determined
under a borrowing base calculation tied to eligible accounts
receivable and inventories as defined in the Indenture. At September
30, 1998, this amount was approximately $50.0 million . In addition,
the Company is not able to make any restricted payments as defined in
the Indenture as long as the terms of the Indenture are not met. This
includes the payment of dividends and the repurchase of shares of the
Company's common stock. 

     Repayment of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company's direct and indirect wholly-owned
subsidiaries, subject to a limitation designed to ensure that such
guarantees do not constitute a fraudulent conveyance. Except as
otherwise allowed in the Indentures pursuant to which the Notes were
issued, there are no restrictions on the ability of such subsidiaries
to transfer funds to the Company in the form of cash dividends, loans
or advances. General provisions of applicable state law, however, may
limit the ability of any subsidiary to pay dividends or make
distributions to the Company in certain circumstances.

     Separate financial statements of the Company's subsidiaries are
not included herein because the aggregate assets, liabilities,
earnings, and equity of the subsidiaries are substantially equivalent
to the assets, liabilities, earnings, and equity of the Company on a
consolidated basis; the subsidiaries are jointly and severally liable
for the repayment of the Notes; and the separate financial statements
and other disclosures concerning the subsidiaries are not deemed
material to investors.

     The Company has a Credit Agreement (as amended, the "Agreement")
with a group of banks with a maturity date of May 23, 2000. The
Agreement contains a $70.0 million unsecured capital expenditure
facility. On May 23, 1999, the borrowing commitment under the capital
expenditure facility is required to be reduced by $20.0 million. At
September 30, 1998, there were no outstanding balances under this
facility. In addition, the Agreement contains a three-year unsecured
working capital facility to provide working capital and letters of
credit in the ordinary course of business. The availability under this
working capital facility is the lesser of (i) $40.0 million, or (ii)
the amount determined under a borrowing base calculation tied to
eligible accounts receivable and inventories as defined in the
Agreement. At September 30, 1998, the lesser amount was $40.0 million.
There were $4.0 million of direct borrowings outstanding under this
working capital facility at September 30, 1998, and there were
approximately $12.8 million of irrevocable letters of credit
outstanding, primarily to secure purchases of raw materials. At
October 31, 1998, there were $14.0 million of direct borrowings and
$12.8 million of irrevocable letters of credit outstanding. 

     The interest rate applicable to the Agreement's unsecured
facilities is tied to various short-term indices. At September 30,
1998, this rate was approximately 6.0% per annum. The Company is
required to pay a quarterly commitment fee based on the unused amount
of each facility.

     The Agreement contains certain covenants and restrictions which
require the Company to, among other things, maintain a minimum
consolidated net worth; minimum fixed charge coverage ratio; and
minimum funded debt to total capitalization percentage. It also places
limits on investments, prepayment of senior subordinated debt,
guarantees, liens and restricted payments. The Agreement is guaranteed
by substantially all of the Company's direct and indirect wholly-owned
subsidiaries.

    At September 30, 1998, the Company was not in compliance with
certain covenants in the Agreement. Waivers have been obtained and
will be required on a monthly basis as long as the Company is not in
compliance. In accordance with the terms of the current waiver, no
credit extensions can be made under the Agreement's capital
expenditure facility and credit extensions under the working capital
facility may not exceed $24.0 million, exclusive of letters of credit
of approximately $12.8 million, as long as the Company is not in
compliance with the covenants. The Company is currently in the process
of obtaining a new secured credit agreement with the same group of
banks to replace the Agreement. The new agreement, which will include
revised covenants, is expected to be in place by the end of November
1998. The Company anticipates that the new agreement will increase its
working capital availability and provide certain funds for acquisition
purposes.

     In connection with the acquisition of the Thriftway Assets in May
1997, the Company recorded approximately $22.9 million of capital
lease obligations with an interest rate of 11.3%. In the first nine
months of 1998, the Company purchased fifty-two of the sixty-four
service station/convenience stores subject to these capital lease
obligations for approximately $13.7 million, thereby reducing long-
term debt. As a result, interest expense will be reduced by
approximately $1.5 million per year or $128,000 per month.

     The Company's Board of Directors has authorized the repurchase of
an additional 1.0 million shares of the Company's common stock. This
authorization is in addition to the 1.5 million share repurchase
program previously approved by the Board. Purchases may be made from
time to time as conditions permit. Shares may be repurchased through
privately-negotiated transactions, block share purchases and open
market transactions. In the third quarter of 1998, the Company
repurchased 93,700 shares at a cost of approximately $1.2 million or
$11.56 per share. In October 1998, the Company repurchased an
additional 60,800 shares at a cost of approximately $0.7 million or
$11.85 per share. Upon determination that the Company was unable to
make restricted payments as defined in the Indenture supporting the 9
3/4% Notes, which is applicable to the repurchase of shares of the
Company's common stock, the Company suspended further purchases under
the program. From the inception of the stock repurchase program, the
Company has repurchased approximately 1.4 million shares for
approximately $14.5 million or $10.41 per share. 

     Repurchased shares are available for a number of corporate
purposes. The number of shares actually repurchased will be dependent
upon market conditions and existing debt covenants, and there is no
guarantee as to the exact number of shares to be repurchased by the
Company. The Company may discontinue the program at any time without
notice. The Company has currently suspended the acquisition of shares
of its common stock under this program due to the restriction noted
above. 

     On September 10, 1998, the Company's Board of Directors declared
a cash dividend on common stock of $0.05 per share payable to
stockholders of record on September 24, 1998. This dividend was paid
on September 30, 1998. Future dividends, if any, are subject to the
results of the Company's operations, existing debt covenants and
declaration by the Company's Board of Directors. As long as the
Company is unable to make restricted payments, as noted above, it may
be required to suspend future dividends, unless the restrictions are
no longer in effect.

     The Company is addressing the matters disclosed in connection
with its 9 3/4% Notes and its Credit Agreement. This includes the
replacement of the Credit Agreement with a new secured agreement, as
discussed above. The Company expects that operating cash flows and the
availability of borrowings under this new facility will be sufficient
to sustain normal operations for the foreseeable future.

OTHER
-----
     Federal, state and local laws and regulations relating to health
and the environment affect nearly all of the operations of the
Company. As is the case with other companies engaged in similar
industries, the Company faces significant exposure from actual or
potential claims and lawsuits involving environmental matters. These
matters include soil and water contamination, air pollution and
personal injuries or property damage allegedly caused by substances
manufactured, handled, used, released or disposed of by the Company.
Future expenditures related to health and environmental matters cannot
be reasonably quantified in many circumstances for various reasons,
including the speculative nature of remediation and cleanup cost
estimates and methods, imprecise and conflicting data regarding the
hazardous nature of various types of substances, the number of other
potentially responsible parties involved, various defenses which may
be available to the Company and changing environmental laws and
interpretations of environmental laws.

     Rules and regulations implementing federal, state and local laws
relating to health and the environment will continue to affect the
operations of the Company. The Company cannot predict what health or
environmental legislation or regulations will be enacted or become
effective in the future or how existing or future laws or regulations
will be administered or enforced with respect to products or
activities of the Company. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of the
regulatory agencies, could have an adverse effect on the financial
position and the results of operations of the Company and could
require substantial expenditures by the Company for the installation
and operation of refinery equipment, pollution control systems and
other equipment not currently possessed by the Company.

     On April 14, 1998, the Board of Directors of the Company approved
an Agreement and Plan of Merger (the "Merger Agreement") whereby Holly
Corporation ("Holly") would be merged with and into Giant (the
"Merger"). The Merger was subject to various conditions stated in the
Merger Agreement. On September 1, 1998, Giant and Holly mutually
agreed to terminate the proposed Merger after considering various
factors, including the inability of the companies to reach a
satisfactory resolution of concerns expressed by the Federal Trade
Commission relative to the possible impact of the Merger on portions
of the market served by the companies and uncertainty caused by a
lawsuit filed against Holly by Longhorn Partners Pipeline, L.P.

     The Company believes that there has recently been a decline in
local crude oil production because of low crude oil prices, which have
resulted in reduced field maintenance work and drilling activity.
Based upon history and discussions with local producers, the Company
believes that production will increase when crude oil prices recover.
In the past, the Company was able to supplement local crude oil
supplies and process up to 1,500 bbls per day of Alaska North Slope
crude oil ("ANS") through its gathering systems interconnection with
the ARCO and Texas-New Mexico common carrier pipeline systems. The
Company understands that the ARCO Pipeline mainline, which was used to
transport ANS to the Four Corners area, is being sold and that plans
are to convert the mainline to a natural gas pipeline. The Company has
not purchased any ANS in 1998 and does not expect the loss of this
supply source to have a material impact on the Company. Based on
projections of local supply availability from the field, which takes
into account current low crude oil prices, the Company believes that
its refining feedstock needs could exceed the supply of crude oil and
other feedstocks that will be available from local sources until crude
oil prices recover. The Company believes that any shortfall in local
supply can be supplied from other sources and transported to the Four
Corners area by various pipelines or other transportation means.
However, there is no assurance that current or projected levels of
supply will be maintained. Any significant long-term interruption in
crude oil supply, due to prices or other factors, or any significant
long-term interruption of crude oil transportation systems would have
an adverse effect on the Company's operations.

     The Company continues to evaluate other supplemental crude oil
supply alternatives for its refineries on both a short-term and
long-term basis.

     The Company is aware of a number of actions, proposals or
industry discussions regarding product pipeline projects that could
impact portions of its marketing areas. One of these projects, the
expansion of the ATA Line (formerly called the Emerald Line) into
Albuquerque was completed in 1997. Another of these announced
projects, which would result in a refined products pipeline from
Southeastern New Mexico to the Albuquerque and Four Corners areas, is
reportedly scheduled for completion in 1999. In addition, various
proposals or actions have been announced to increase the supply of
pipeline-supplied products to El Paso, Texas, which is connected by
pipeline to the Albuquerque area to the north. The completion of some
or all of these projects would result in increased competition by
increasing the amount of refined products available in the
Albuquerque, Four Corners and other areas, as well as allowing
additional competitors improved access to these areas.

     In 1997, the Company outlined a program for Year 2000 ( Y2K )
compliance. The Y2K issue is the result of certain computer systems
using a two-digit format rather than four digits to define the
applicable year. Such computer systems will be unable to properly
interpret dates beyond the year 1999, which could lead to system
failure or miscalculations causing disruptions of operations. The
Company has identified three major areas determined to be critical for
successful Y2K compliance: (1) financial and information system
applications, (2) manufacturing and process applications, including
embedded chips, and (3) business relationships.

     The Company has hired an outside consultant to act as its Year
2000 project manager. This consultant is directing the Company's
efforts in identifying and resolving Y2K issues pursuant to a five-
phase program for Year 2000 compliance. The five phases are as
follows:

     1) Awareness Phase. This phase included the development of a
Project Management Plan ("PMP") to make the Company aware of the Y2K
problem, identify potential Y2K issues in all areas of the Company and
develop a plan of action to resolve these issues. This phase was
completed in July 1998.

     2) Assessment Phase. Completed in October 1998, this phase
included generating a complete inventory of all software, hardware,
processing equipment and embedded chips throughout the entire
organization and identifying those items that were Y2K compliant and
those that were not.

     3) Renovation (Remedy) Phase. In this phase, strategies have been
and will be developed for each item inventoried during the assessment
phase to determine whether remedial action is required and, if so,
whether the item should be eliminated, replaced, or updated. This
phase will also include the determination of priorities and
scheduling, including contingency plans for all critical items. This
phase is scheduled for completion in February 1999.

     4) Validation (Testing) Phase. In this phase, a test plan is
developed and implemented to validate the remedies selected in the
previous phase. Test plans are in various stages of implementation and
are scheduled to be completed by March 1999.

     5) Implementation Phase. This phase involves the use of the Y2K
compliant inventory, development and implementation of additional
plans to avoid Y2K problems and the development and finalizing of
contingency plans. The scheduled completion date for this phase is
April 1999.

     At the present time, approximately 1,300 items have been
inventoried consisting of software, hardware, processing equipment and
embedded chips. Of these inventoried items, 66% are Y2K compliant, 9%
are not compliant and fall into the renovation phase, and 25% are
still being evaluated. All software, hardware, processing equipment
and embedded chips are being prioritized based on critical business
functions and the most critical will be scheduled for validation
testing and implementation first. 

     In the financial and information system area, the Company's core
financial systems are not Y2K compliant, and the Company has begun a
program of remediation and replacement utilizing an outside consultant
as well as internal staff. The Company had previously indicated that
it would be replacing its core financial systems at a cost of
approximately $2.5 million, however, it has reevaluated that strategy
and determined that renovating the current system provides the least
amount of risk in achieving compliance by April 1999. In addition to
its core financial systems, certain subsidiary financial systems and
other information systems will require replacement or renovation. The
Company had previously identified the potential for approximately
4,000 man-hours of work to bring these financial and information
systems into compliance at a cost of approximately $0.8 million.
During the assessment phase, it was determined that the remediation of
the Company s financial and information systems could be accomplished
for significantly less than was originally estimated due to the
development of a program methodology that simplified the modification
of computer software code. 

     The remediation and replacement program for the core financial
systems is well under way and is on target to meet or exceed the April
1999 deadline. To date, 20% of the targeted core financial and other
related applications have been renovated, 20% are being replaced and
60% are in the process of being renovated. The Company believes that
all critical issues have been identified in the financial and
information system area, and that resources are available to bring
these systems into compliance by the scheduled completion date. 

     In the manufacturing and process area, the Company has completed
an inventory of the software and hardware at all locations (including
embedded chips, such as process controllers, chromatographs and Waugh
controllers) and remediation is currently in process. In this area,
80% percent of the processes are compliant, 10% are being renovated
and 10% have been scheduled for renovation. The Company believes that
all critical issues have been identified in the manufacturing and
process area and that resources are available to bring these systems
into compliance by the scheduled completion date of April 1999. 

     In the business relationship area, the Company continues to
correspond with its business partners in order to identify and resolve
Y2K issues that may have an impact on operations. The Company has sent
compliance questionnaires to over 500 business partners and continues
to follow up with those who have not responded. Critical business
partners identified by the Company include, among others, utilities,
pipeline companies, terminals, crude oil and other raw material
suppliers, certain key customers, financial institutions, insurance
companies and employee benefit plan administrators. To date, the
Company has received 126 responses to its compliance questionnaires
representing 12% of all questionnaires sent. The Company has received
responses from 10% of those business partners identified as being
critical. The Company has not identified any significant problems
relating to the responses it has received and analyzed to date. 

     Remediation of the Y2K items identified by the Company is being
accomplished using both internal and external manpower. The Company
estimates that the total cost of the Y2K project will be between
$600,000 and $800,000. The Company anticipates that it will spend up
to 50% of the estimated amount by the end of 1998. To date the Company
has expended or has committed to approximately $300,000 of the
estimated amount. The Company expects to fund its Y2K expenditures
from operating cash flows and short-term borrowings if necessary. The
total cost associated with required modifications to become Year 2000
compliant is not expected to be significant to the Company's financial
position or results of operations.   

     Contingency plans will be prepared for all of the Company's
critical business processes in order to minimize any disruptions in
these operations, allowing the Company to continue to function on
January 1, 2000 and beyond. These plans will be developed to mitigate
both internal risks as well as potential risks in the chain of the
Company's suppliers and customers. The Company believes that the
contingency planning process will be an ongoing one which will require
modifications as the Company obtains additional information from its
remediation and testing phases and about the status of third party
Year 2000 readiness. The Company has not developed any contingency
plans to date, but will be developing such plans over the next six
months for all of its business units as it completes the renovation,
validation and implementation phases of its Y2K compliance project. 

     The Company is currently assessing its most reasonably likely
worst case scenario. It is the Company's belief that the greatest
potential risk from the Year 2000 issue could be the inability of
principal suppliers to be Year 2000 ready. This could result in delays
in product deliveries from such suppliers and disruption of the
distribution channel, including oil pipelines, transportation vendors
and the Company's own distribution centers. Another significant
potential risk is the general failure of systems and necessary
infrastructure such as electricity supply. Contingency plans will be
developed to address these scenarios.

     The Company believes that completed and planned modifications and
replacements of its internal systems and equipment will allow it to be
Year 2000 compliant in a timely manner. However, due to the widespread
nature of potential year 2000 issues, there can be no assurance that
all of the Company's Y2K issues will be identified and resolved in a
timely manner, or that contingency plans will mitigate the effects of
any noncompliance. In addition, there can be no assurance that third
parties upon which the Company relies will be Year 2000 compliant in a
timely manner or that the third parties' contingency plans will
mitigate the effects of any noncompliance. Any significant long-term
disruptions to the Company's business caused by noncompliance could
have a material adverse effect on the Company's financial position and
results of operations.

     "Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This report contains forward-looking statements
that involve risks and uncertainties, including but not limited to
economic, competitive and governmental factors affecting the Company's
operations, markets, products, services and prices; the adequacy of
raw material supplies; the potential effects of various pipeline
projects as they relate to the Company's market area and future
profitability; the estimated cost of and ability of the Company or
third parties on which it relies to become Y2K compliant; risks
associated with certain covenants relating to its existing Credit
Agreement and its 9 3/4% Notes and other risks detailed from time to
time in the Company's filings with the Securities and Exchange
Commission.
<PAGE>
<PAGE>
                                  PART II

                             OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

     There are no material pending legal proceedings required to be
reported pursuant to Item 103 of Regulation S-K. The Company is a
party to ordinary routine litigation incidental to its business. In
addition, there is hereby incorporated by reference the information 
regarding contingencies in Note 6 to the Unaudited Condensed
Consolidated Financial Statements set forth in Item 1, Part I hereof
and the discussion of certain contingencies contained herein under the
heading "Liquidity and Capital Resources - Other."

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit:

     27 - Financial Data Schedule.

(b)  Reports on Form 8-K. Report on Form 8-K dated September 1,
     1998, with respect to the termination of the proposed merger
     whereby Holly Corporation would be merged with and into the
     Company in accordance with an Agreement and Plan of Merger
     approved by the Company's Board of Directors on April 14, 1998.<PAGE>
<PAGE>
                              SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report on Form 10-Q for the
quarter ended September 30, 1998 to be signed on its behalf by the
undersigned thereunto duly authorized.

                           GIANT INDUSTRIES, INC.


                          /s/ Gary R. Dalke
                          --------------------------------------------
                          Gary R. Dalke
                          Controller and Assistant Secretary
                          (Principal Accounting Officer)

Date: November 16, 1998