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                         FORM 10-K

             SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, D.C. 20549

(Mark One)

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

     For the fiscal year ended December 31, 1998.

                                OR

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

          For the transition period _______ 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

   Securities registered pursuant to Section 12(b) of the Act:

                                   Name of each exchange
    Title of each class            on which registered
    -------------------            -------------------
Common Stock, $.01 par value       New York Stock Exchange

   Securities registered pursuant to Section 12(g) of the Act:
                             None

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, 
and will not be contained, to the best of registrant's knowledge, 
in definitive proxy or information statements incorporated by 
reference in Part III of this Form 10-K or any amendments to this 
Form 10-K. [X] 

     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 [ ]

     As of February 26, 1999, 10,838,767 shares of the registrant's 
Common Stock, $.01 par value, were outstanding and the aggregate 
market value of the voting stock held by non-affiliates of the 
registrant was approximately $47,161,000 based on the New York Stock 
Exchange closing price on February 26, 1999.

               DOCUMENTS INCORPORATED BY REFERENCE

     Parts of the following documents are incorporated by reference 
in Part III of this Form 10-K Report:

     Proxy Statement for Registrant's 1999 Annual Meeting of 
Stockholders - Items 10, 11, 12, and 13.
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                             PART I

ITEMS 1. AND 2.  BUSINESS AND PROPERTIES.

GENERAL
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
---------------------------------------------------------------------
     The primary factors affecting the results of the Company's
1998 operations as compared to its 1997 operations were (i) a
decline in refinery margins, partially related to (a) a sharp
decline in crude oil and finished product prices resulting
from, among other things, a decline in worldwide demand for
crude oil and finished products, and (b) non-cash charges for
reductions in the carrying value of inventories; (ii) the
acquisition of ninety-six service station/convenience stores
and related assets in May 1997 from Thriftway Marketing Corp.
and affiliates (the "Thriftway Assets"), the June 1997
acquisition of independent industrial/commercial petroleum
products distributor Phoenix Fuel Co., Inc. ("Phoenix Fuel",
and collectively with the Thriftway Assets, the "1997
Acquisitions"), the acquisition of seven service
station/convenience stores and related assets in February 1998
from DeGuelle Oil Company and DeGuelle Enterprises (the
"DeGuelle Assets") and, in June and July 1998, the acquisition
of thirty-two service station/convenience stores and related
assets and the lease of one other service station/convenience
store from Kaibab Industries, Inc. (the "Kaibab Assets", and
collectively with the DeGuelle Assets, the "1998
Acquisitions"); (iii) increased interest costs related to the
issuance of $150.0 million of 9% Senior Subordinated Notes (the
"9% Notes") in August 1997, to partially finance the 1997 and
1998 Acquisitions; (iv) increased operating costs, including
depreciation and amortization, and selling, general and
administrative expenses ("SG&A") primarily related to the above
acquisitions and planning for future growth; (v) a decrease in
refinery sourced sales volumes due in part to a major
maintenance turnaround at the Ciniza refinery in the second
quarter of 1998; and (vi) a write-off of costs incurred in
connection with the termination of a proposed merger with Holly
Corporation that had been approved by the Company's Board of
Directors on April 14, 1998.

EARNINGS (LOSS) BEFORE INCOME TAXES
-----------------------------------
     For the year ended December 31, 1998, the Company incurred
a loss before income taxes of $3.7 million, a decrease of
approximately $28.8 million from earnings before income taxes
of $25.1 million for the year ended December 31, 1997. The
decrease is primarily due to (i) a 24% decline in refinery
margins; (ii) a 40% increase in interest costs; (iii) a 21%
increase in operating expenses, including depreciation and
amortization; (iv) a 31% increase in administrative expenses,
including a write-off of approximately $1.4 million of costs
incurred in connection with the terminated merger with Holly
Corporation; and (v) a decrease in refinery sourced sales
volumes for approximately 3%. These items were offset in part
by contributions from the 1997 and 1998 Acquisitions and a
reduction in 1997 pretax earnings for a $1.2 million loss
incurred in connection with the sale of the Company's ethanol
processing plant.

REVENUES
--------
     Revenues for the year ended December 31, 1998 were $642.5
million, a decrease of approximately $14.8 million or 2% from
$657.3 million in the comparable 1997 period. The decrease is
primarily due to a 27% decline in refinery weighted average
selling prices and a 3% decrease in refinery sourced finished
product sales volumes. These decreases were offset in part by
increased revenues attributable to the 1997 and 1998
Acquisitions and an 11% increase in merchandise sales for
retail operations other than those associated with the
Acquisitions.

     For the year ended December 31, 1998, volumes of refined
products sold through the Company's retail units increased
approximately 45% from 1997 levels primarily due to the
acquisition of the Thriftway, Kaibab and DeGuelle Assets. In
addition, the volumes of finished product sold from the
Company's other retail operations increased approximately 8%.
This increase was largely due to a 28% increase in the volumes
of finished product sold from the Company's travel center, due
in large part to improved marketing programs put in place
during 1997, and a 3% increase in finished product volumes sold
from the Company's other retail service station/convenience
stores.

COST OF PRODUCTS SOLD
---------------------
     For the year ended December 31, 1998, cost of products
sold decreased $22.1 million or 5% to $465.6 million from
$487.7 million in the corresponding 1997 period. The decrease
is primarily due to a 31% decline in average crude oil costs
and a 3% decrease in refinery sourced finished product sales
volumes. These decreases in costs were offset in part by
increases in costs related to the 1997 and 1998 Acquisitions.
In addition, 1998 cost of products sold increased by
approximately $8.5 million as a result of a reduction in the
carrying value of inventories related to a decline in crude oil
and refined product prices. Cost of products sold in 1997 was
higher by approximately $2.9 million as a result of similar
reductions in inventory carrying values.

OPERATING EXPENSES
------------------
     Operating expenses for the year ended December 31, 1998
were $102.5 million, an increase of approximately $17.3 million
or 20% from $85.2 million for the year ended December 31, 1997.
Substantially all of the increase is due to the 1997 and 1998
Acquisitions, including increased administrative and support
costs related to expanded retail operations. For the Company's
other operations, 1998 operating costs were relatively
comparable to those experienced in 1997.

DEPRECIATION AND AMORTIZATION
-----------------------------
     For the year ended December 31, 1998, depreciation and
amortization increased approximately $5.2 million or 22% to
$29.2 million from $24.0 million in the same 1998 period.
Approximately 61% of the increase is due to the 1997 and 1997
Acquisitions. The remainder of the increase is 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
--------------------------------------------
     SG&A expenses for the year ended December 31, 1998 were
$25.3 million (including approximately $1.4 million for the
write-off of merger costs), an increase of approximately $6.0
million or 31% from $19.3 million in the corresponding 1997
period. Approximately 7% of the increase is due to SG&A
associated with the operations of Phoenix Fuel. The remainder
of the increase is primarily the result of higher 1998 payroll
and related costs, and higher 1998 outside services and other
costs, both in large part due to the 1997 and 1998 Acquisitions
and planning for future growth. These increases were partially
offset by a $1.4 million decrease in management incentive bonus
expense in the 1998 period due to the Company incurring a net
loss for the year.

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.  For the year, the Company has written off
approximately $1.4 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 (INCOME)
-------------------------
     For the year ended December 31, 1998, interest expense
increased approximately $7.3 million or 40% to $25.4 million
from $18.1 million in the comparable 1997 period. The increase
is primarily due to additional interest expense related to the
9% Notes. 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.

     For the year ended December 31, 1998, interest and
investment income decreased approximately $0.3 million or 14%
to $1.8 million from $2.1 million. The decrease is primarily
due to the use of some of the proceeds from the issuance of the
9% Notes, which had been invested in short-term instruments,
for the 1998 Acquisitions. The effects of fluctuations in
interest rates applicable to invested funds were nominal.

INCOME TAXES
------------
     The benefit for income taxes for the year ended December
31, 1998, and the provision for income taxes for the year ended
December 31, 1997, resulted in an effective benefit rate of
approximately 40% for the year ended December 31, 1998, and an
effective tax rate of approximately 39% for the comparable 1997
period.

OUTLOOK
-------
     This Outlook section and other parts of this Management's
Discussion and Analysis ("MD&A") contain forward-looking
information and involve risks and uncertainties that could
significantly impact expected results. Certain important
factors that in some cases have affected, and in the future
could affect, the Company's results of operations, and that
could cause such future results of operations to differ are
described in the "Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995 at the end of this
MD&A.

     The Company anticipates improvements in refining margins
for 1999 as compared to 1998. Additionally, the Company plans
to implement programs to reduce operating costs and to increase
purchasing power. The Company also intends to focus on
increasing its retail operations through construction and
acquisition, expanding upon its marketing alliance with Conoco
and implementing the Company's new Mustang branding strategy.
Further, the Company intends to implement a new jobber/open
dealer program that the Company believes is unique to the
industry and to continue to improve the integration of, and to
develop synergies related to, the 1997 and 1998 Acquisitions.
The Company will also continue to seek additional opportunities
to expand refinery capacity through acquisition and selected
refinery projects. The Company's future results of operations
are primarily dependent on producing or purchasing, and selling
sufficient quantities of refined products at margins sufficient
to cover fixed and variable expenses.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
---------------------------------------------------------------------
     The primary factors affecting the results of the Company's
1997 continuing operations as compared to its 1996 continuing
operations were the acquisition of the Thriftway Assets and
Phoenix Fuel near the end of May 1997, higher interest costs
related to the financing of the 1997 Acquisitions, including
the issuance of the 9% Notes in August 1997, increased refinery
margins and higher operating and SG&A costs.

EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
-------------------------------------------------------
     Earnings from continuing operations before income taxes
were $25.1 million for the year ended December 31, 1997, a
decrease of approximately $3.1 million from $28.2 million for
the year ended December 31, 1996. The decrease was primarily
due to increased SG&A and operating costs for operations other
than the 1997 Acquisitions, including a 20% increase in
depreciation and amortization costs, a 5% increase in other
operating costs and a 10% increase in SG&A costs. These
increases in costs were offset in part by a pretax earnings
contribution of approximately $8.0 million from the 1997
Acquisitions. Earnings were also impacted by a 3% increase in
average yearly refinery margins, in spite of reduced margins
early in the year resulting from a decline in West Coast
product prices. Refinery sourced sales volumes remained
relatively flat even though production was curtailed at both of
the Company's refineries during the year due to a scheduled
major, every four-year, maintenance turnaround at the Company's
Bloomfield refinery, and minor scheduled maintenance
turnarounds on the reformer and isomerization units at the
Ciniza refinery. In addition, the Company sold its ethanol
processing plant in the fourth quarter of 1997, incurring a
pretax loss of approximately $1.2 million on the disposition.

REVENUES
--------
     Revenues for the year ended December 31, 1997 increased
approximately $158.1 million or 32% to $657.3 million from
$499.2 million in the comparable 1996 period. The increase was
primarily due to the 1997 Acquisitions, offset in part by a 3%
decline in refinery weighted average selling prices.

     The volumes of refined products sold through the Company's
retail units increased approximately 37% from 1996 levels
primarily due to the acquisition of the ninety-six retail
service station/convenience stores, offset in part by a 1%
decline in the volumes of finished product sold from the
Company's other retail operations. The decline reflected a 2%
decrease in the volumes of finished product sold from the
Company's other service station/convenience stores, due
primarily to increased competitive pressures, and a 6% increase
in volumes sold from the Company's travel center, due in large
part to improved marketing programs put in place during 1997.

COST OF PRODUCTS SOLD
---------------------
     For the year ended December 31, 1997, cost of products
sold increased $125.8 million or 35% to $487.7 million from
$361.9 million in the corresponding 1996 period. The increase
is primarily due to the 1997 Acquisitions, offset in part by a
6% decline in average crude oil costs. In addition, the
liquidation of certain lower cost crude oil LIFO inventory
layers in 1996 reduced 1996 cost of products sold by
approximately $2.8 million. There were no similar liquidations
in 1997.

OPERATING EXPENSES
------------------
     For the year ended December 31, 1997, operating expenses
increased approximately $20.9 million or 32% to $85.2 million
from $64.3 million for the year ended December 31, 1996.

     Approximately 85% of the increase was due to the 1997
Acquisitions. For the Company's other operations, 1997 costs
increased because of increased retail advertising costs, higher
payroll and related costs, higher refinery purchased fuel and
materials costs and higher retail operating bonuses. These
increases were offset in part by a reduction in refinery
utility costs.

DEPRECIATION AND AMORTIZATION
-----------------------------
     For the year ended December 31, 1997, depreciation and
amortization increased approximately $6.3 million or 36% to
$24.0 million from $17.7 million in the same 1996 period.
Approximately 43% of the increase was due to the 1997
Acquisitions. The remaining increases were primarily related to
other retail acquisitions and construction, remodeling and
upgrades in retail and refinery operations, along with the
amortization of 1997 and 1996 refinery turnaround costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
     For the year ended December 31, 1997, selling, general and
administrative expenses increased approximately $3.7 million or
23% to $19.3 million from $15.6 million in the corresponding
1996 period. Approximately 56% of the increase was due to the
selling, general and administrative activities of Phoenix Fuel.
The remaining increases were primarily the result of higher
payroll and related costs, due in part to acquisition activity
and planning for future growth. In addition, the comparisons
were affected by higher 1996 expenses relating to accruals for
incentive bonus plans and severance tax assessments.

INTEREST EXPENSE (INCOME)
-------------------------
     For the year ended December 31, 1997, interest expense
increased approximately $5.8 million or 47% to $18.1 million
from $12.3 million in the comparable 1996 period. The increase
was primarily due to an increase in interest expense because of
additional long-term debt related to the 1997 Acquisitions,
including the issuance of the 9% Notes in August 1997. The
increase was offset in part by a reduction in interest expense
related to the payment of approximately $32.0 million of
long-term debt in 1996 from operating cash flow and the
proceeds from the sale of the Company's oil and gas operations.
The average interest rate for the 1997 period is slightly
higher due to capital lease transactions related to the
acquisition of the Thriftway Assets and the issuance of the 9%
Notes.

     For the year ended December 31, 1997, interest and
investment income increased approximately $1.3 million or
176.7% to $2.1 million from $0.8 million in the comparable 1996
period. The increase was primarily due to an increase in excess
funds available for investment, resulting from the issuance of
the 9% Notes in August 1997. The effects of fluctuations in
interest rates applicable to invested funds were nominal.

INCOME TAXES
------------
     Income taxes for the years ended December 31, 1997 and
1996 resulted in effective tax rates of approximately 39% for
each period.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW FROM OPERATIONS
-------------------------
     Operating cash flows for the year ended December 31, 1998,
decreased compared to the year ended December 31, 1997,
primarily as the result of a decline in net earnings. The
decline, however, was offset in part by an increase in cash
flows related to operating assets and liabilities in each
period. Net cash provided by operating activities totaled $26.9
million for the year ended December 31, 1998, compared to $31.3
million for the comparable 1997 period. 

WORKING CAPITAL
---------------
     Working capital at December 31, 1998 consisted of current
assets of $171.7 million and current liabilities of $80.6
million, or a current ratio of 2.13:1. 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,
receivables and inventories. Accounts receivable have decreased
primarily as the result of a decline in the selling price of
finished products. Inventories have decreased primarily due to
a decline in crude oil and refined product prices. In addition,
the volume of finished product stored at the Company's
refineries and at terminal locations has declined. These
decreases were offset in part by an increase in the volume of
retail finished product and merchandise inventories, resulting
primarily from the recent service station/convenience store
acquisitions. Current liabilities have decreased due to a
decrease in accounts payable and accrued expenses. Accounts
payable have decreased primarily as a result of a decline in
the cost of crude oil and other raw materials. Accrued expenses
have decreased primarily due to a reduction in the amount
accrued for contingency payments related to the acquisition of
the Bloomfield refinery, reduced accruals for management
incentive and other bonuses, and no accrual for a 1998 ESOP
contribution. 

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 $60.3 million for
the year ended December 31, 1998. Expenditures included amounts
for the Ciniza refinery second quarter turnaround, refinery and
transportation equipment and facility upgrades, capacity
enhancement projects for the refineries, the start of
construction of a finished products terminal, which the Company
anticipates will be completed in the second quarter of 1999
(the "Terminal"), construction of various new retail units,
acquisition of land for future retail units, rebranding and
reimaging various retail units to further the Conoco marketing
alliance and to establish the Mustang brand, and continuing
retail equipment and system upgrades.

     On February 10, 1998, the Company completed the purchase
of the DeGuelle Assets for $9.75 million. 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. For the year ended
December 31, 1997, prior to the purchase by the Company, these
operations 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. 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 and July 1998, the Company completed the
acquisition of the Kaibab Assets for approximately $28.4
million. The assets acquired included thirty-two service
station/convenience stores, equipment, fuel truck/transports
and undeveloped real estate. In addition, one other unit was
leased under an operating lease arrangement for a period of two
years. 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 $4.6
million was recorded in connection with the acquisition of the
Kaibab Assets.

     On December 31, 1998, the Company, through two of its
wholly-owned subsidiaries, Giant Industries Arizona, Inc. and
Giant Four Corners, Inc., and Franchise Finance Corporation of
America ("FFCA"), completed a sale-leaseback transaction. Under
the terms of the Sale and Lease Agreement (the "Agreement"),
FFCA purchased eighty-three service station/convenience stores
from the Company for approximately $51.8 million, including six
of the seven DeGuelle Asset units and twenty-six of the Kaibab
Asset units, with the remainder having been acquired as part of
the acquisition of the Thriftway Assets in 1997. The Company in
turn leased the eighty-three service station/convenience stores
back from FFCA under an operating lease arrangement with an
initial term of fifteen years and three separate options to
continue the lease for successive periods of five years.
Initial annual rental payments under the lease agreement are
approximately $5.1 million and will be adjusted upward by six
percent on the second anniversary of the Agreement and every
second anniversary thereafter, on a compounded basis, during
the initial lease term and any extension thereof. The Company
has a right of first refusal to acquire the leased assets upon
an offer to purchase the assets by a third party. Net proceeds
to the Company, after expenses, were approximately $50.1
million. The Company recorded a gain of approximately $4.0
million on the sale of the assets. This gain has been deferred
and will be amortized over the initial lease period of fifteen
years.

     In accordance with the Indentures supporting the Company's
9% Notes and the $100.0 million of 9 3/4% senior subordinated
notes, issued by the Company in 1993 and due 2003 (the "9 3/4%
Notes," and collectively with the 9% Notes, the "Notes"), the
Company must either use the net proceeds from the FFCA
transaction to make a permanent reduction in senior
indebtedness (as defined in the respective Indentures), or make
an investment in capital assets used in the Company's principal
business (as defined in the respective Indentures). The Company
has 360 days in which to use the net proceeds for such a
purpose under the terms of the Indenture supporting the 9%
Notes, and has 270 days under the terms of the Indenture
supporting of 9 3/4% Notes. In each case, upon completion of
the specified period, if all of the net proceeds have not been
used for such a purpose, the Company may be obligated, under
certain circumstances, to repurchase the respective senior
subordinated notes with the unused portion. The Company
anticipates that it will use the net proceeds from the FFCA
transaction to invest in capital assets or to reduce senior
indebtedness before the applicable periods expire. 

     The Company has budgeted approximately $37.6 million for
capital expenditures in 1999, excluding any potential
acquisitions. Of this amount, approximately $12.3 million is
budgeted for non-discretionary projects that are required by
law or regulation or to maintain the physical integrity of
existing assets. These expenditures are primarily for
operational and environmental projects at the refineries. The
remaining budget of $25.3 million is for discretionary projects
to sustain or enhance the current level of operations, increase
earnings associated with existing or new business and to expand
operations. The primary projects in this latter category
include the completion of the Terminal, construction or rebuild
of retail units, completion of the Mustang/Conoco rebranding
and reimaging project, retail site acquisitions, upgrades to
existing retail units, capacity enhancement projects at the
refineries, and facility and equipment upgrades at the
refineries, transportation operations and administrative
operations. In addition to these budgeted amounts, the Company
could incur an additional contingent payment related to the
acquisition of the Bloomfield refinery, in accordance with the
Bloomfield refinery acquisition agreement, if certain criteria
are met. For 1998, the Company incurred a contingent payment
obligation of approximately $2.0 million which will be paid in
1999. This amount has been accrued and allocated to the
appropriate assets and will be amortized over their remaining
estimated useful lives.

     The amount of these capital projects that are actually
undertaken in 1999 will depend on, among other things,
identifying and consummating acceptable acquisitions, general
business conditions and results of operations. 

     The Company continues to investigate other strategic
acquisitions as well as capital improvements to its existing
facilities. The Company is also actively pursuing the possible
sale or exchange of non-strategic or underperforming assets.

     Much of the capital currently planned to be spent by the
Company for environmental compliance is integrally related to
operations or to operationally required projects. 

     The Company does not specifically identify capital
expenditures related to such projects on the basis of whether
they are for environmental as opposed to economic purposes.
With respect to capital expenditures budgeted primarily to
satisfy environmental regulations, the Company estimates that
approximately $3.7 million, $0.5 million and $0.7 million was
spent in 1998, 1997 and 1996, respectively, and that $2.6
million is expected to be spent in 1999. With respect to the
Company's operating expenses for environmental compliance,
while records are not kept specifically identifying or
allocating such expenditures, management believes that the
Company incurs significant operating expense for such purposes.

     Changes in the tax laws, changes in federal and state
clean air and clean fuel requirements and other changes in
environmental laws and regulations may increase future capital
and operating expenditure levels.

     Working capital, including that necessary for capital
expenditures and debt service, will be funded through cash
generated from operating activities, existing cash balances
and, if necessary, future borrowings. Future liquidity, both
short and long-term, will continue to be primarily dependent on
producing or purchasing, and selling sufficient quantities of
refined products at margins sufficient to cover fixed and
variable expenses.

CAPITAL STRUCTURE
-----------------
     At December 31, 1998 and 1997, the Company's long-term
debt was 68.9% 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 64.0% and
59.1% at December 31, 1998 and 1997, respectively.

     The Company's capital structure includes 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, repurchase shares of the Company's common stock,
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 would 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 December 31, 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 December 31, 1998,
this amount was approximately $73.5 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.

     On December 23, 1998, the Company entered into a $65.0
million secured Credit Agreement (the "Credit Agreement") due
December 23, 2001, with Bank of America National Trust and
Savings Association, Union Bank of California, N.A. and Bank
One, Arizona, N.A. This Credit Agreement, a revolving loan
agreement, is primarily a working capital and letter of credit
facility and is secured by eligible accounts receivable and
inventories as defined in the Credit Agreement. In addition,
the Company is able to borrow up to $9.0 million to exercise
its purchase rights in connection with the Thriftway Assets
that are currently subject to capital lease obligations, and up
to $10.0 million for other acquisitions as defined in the
Credit Agreement. The availability of funds under this facility
is the lesser of (i) $65.0 million, or (ii) the amount
determined under a borrowing base calculation tied to the
eligible accounts receivable and inventories. At December 31,
1998, the availability of funds under the Credit Agreement was
approximately $49.0 million. There were $24.0 million of direct
borrowings outstanding under this facility at December 31,
1998, and there were approximately $12.8 million of irrevocable
letters of credit outstanding, primarily to secure purchases of
raw materials. At March 1, 1999, no direct borrowings were
outstanding and approximately $12.8 million of irrevocable
letters of credit were outstanding.

     The interest rate applicable to the Credit Agreement is
tied to various short-term indices. At December 31, 1998, this
rate was approximately 6.5% per annum. The Company is required
to pay a quarterly commitment fee ranging from 0.325% to 0.500%
per annum of the unused amount of the facility. The exact rate
depends on meeting certain conditions in the Credit Agreement.

     The Credit Agreement contains certain covenants and
restrictions which require the Company to, among other things,
maintain a minimum consolidated net worth, a minimum interest
coverage ratio and a maximum capitalization ratio. It also
places limits on investments, dispositions of assets,
prepayments of senior subordinated debt, guarantees, liens and
restricted payments. At December 31, 1998, the Company was in
compliance with the Credit Agreement covenants and was not
aware of any noncompliance with the other terms of the Credit
Agreement. The Credit Agreement is guaranteed by all of the
Company's direct and indirect wholly-owned subsidiaries.

     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%.
During the year ended December 31, 1998, the Company purchased
fifty-four of the sixty-four service station/convenience stores
subject to these capital lease obligations for approximately
$14.7 million, thereby reducing long-term debt. As a result,
interest expense will be reduced by approximately $1.7 million
per year or $138,000 per month.

     The Company's Board of Directors has authorized the
repurchase of 2.5 million shares of the Company's common stock.
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. During the year ended December 31, 1998, the
Company repurchased 154,500 shares at a cost of approximately
$1.9 million or $12.30 per share. In October 1998, 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, resulting in a weighted
average cost of $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.

     For the year ended December 31, 1998, the Company's Board
of Directors declared cash dividends on common stock totaling
$0.15 per share. 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 will not be able to declare dividends.

OTHER
-----
     The Company is exposed to various market risks, including
changes in certain commodity prices and interest rates. To
manage the volatility relating to these natural business
exposures, the Company periodically uses commodity futures and
options contracts to reduce price volatility, to fix margins in
its refining and marketing operations and to protect against
price declines associated with its crude oil and finished
products inventories. The potential loss from a hypothetical
10% adverse change in commodity prices on open commodity
futures and options at December 31, 1998 would not materially
affect the Company's consolidated financial condition and
results of operations.

     Additionally, the Company has a $65,000,000 Credit
Agreement that is floating-rate debt tied to various short-term
indices. As a result, the Company's annual interest costs
associated with this debt will fluctuate. At December 31, 1998,
the amount of borrowings under this Credit Agreement were
$24,000,000. The potential loss from a hypothetical 10% adverse
change in the floating interest rate would not have a material
affect on the Company's consolidated financial condition and
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 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.

     The Company, and several other entities, have received a
notice of intent to file suit from the New Mexico Office of the
Natural Resources Trustee (the "ONRT") for the recovery of
$260.0 million in alleged damages to natural resources,
including alleged damages to ground water, surface water and
soil. The notice relates to the South Valley Superfund site in
Albuquerque, New Mexico. The site allegedly includes
contamination that originated from a GE Aircraft Engines/U.S.
Air Force facility, as well as contamination that allegedly
originated from a petroleum products terminal that was acquired
by the Company in 1995 (the "Albuquerque Terminal").
Potentially responsible party liability is joint and several,
such that a responsible party may be liable for all natural
resources damages at a site even though it was responsible for
only a small part of such damages. At the time of purchase by
the Company, Texaco Refining and Marketing Inc. ("Texaco")
agreed to defend, indemnity, reimburse and hold the Company
harmless from and against all claims and damages arising from,
or caused by, pre-closing contamination. Texaco has
acknowledged its obligation under this agreement, subject to
any evidence that the ONRT intends to assess damages for any
releases resulting from the Company's operations. The Company
believes that any natural resources damages associated with the
South Valley Superfund site relate to releases that predate the
Company's acquisition of the Albuquerque Terminal and,
accordingly, does not believe that it needs to record a
liability in connection with this matter.

     In May 1991, the Environmental Protection Agency ("EPA")
notified the Company 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"), adjacent to the Company's inactive
Farmington refinery. This refinery was operated until 1982.
Although a final plan of action for the Landfill has not yet
been adopted by the Bureau of Land Management (the "BLM"), the
owner of the Landfill, BLM developed a proposed plan of action
in 1997, which it projected would cost approximately $3.9
million 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, BLM is proposing to take
additional remedial actions with an estimated cost of
approximately $1.8 million. 

     In 1989, a consultant to the Company estimated, based on
various assumptions, that the Company's share of potential
liability could be approximately $1.2 million. This figure was
based upon estimated Landfill remediation costs significantly
higher than those being proposed by BLM. The figure was also
based on the consultant's evaluation of such factors as
available clean-up technology, BLM's involvement at the site
and the number of other entities that may have had involvement
at the site, but did not include an analysis of all of the
Company's potential legal defenses and arguments, including
possible setoff rights.

     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 the party was
responsible for only a small part of such costs. Although it is
possible that the Company may ultimately incur liability for
clean-up costs associated with the Landfill, a reasonable
estimate of the amount of this liability, if any, cannot be
made at this time because, among other reasons, the final site
remedy has not been selected, a number of entities had
involvement at the site, allocation of responsibility among
potentially responsible parties has not yet been made, and
potentially-applicable factual and legal issues have not been
resolved. Based on current information, the Company does not
believe that it needs to record a liability in relation to
BLM's proposed plan.

     The Company is undertaking an investigation into potential
lead contamination at a 5.5 acre site that the Company owns in
Bloomfield, New Mexico. The investigation arises out of the
removal of a 55,000 barrel crude oil storage tank by a
contractor. Although it is possible that the Company may
ultimately incur liability for lead clean-up costs, a
reasonable estimate of the amount of the Company's liability,
if any, cannot be made at this time because all
potentially-applicable factual and legal issues have not been
resolved, including whether there is lead at the site in
amounts exceeding applicable remediation levels and whether
remediation costs, if any, can be recovered from third parties.

     The Company has an environmental liability accrual of
approximately $2.7 million. Approximately $0.8 million relates
to ongoing environmental projects, including the remediation of
a hydrocarbon plume that appears to extend no more than 1,800
feet south of the inactive Farmington refinery and hydrocarbon
contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1.9 million relates to
an originally estimated liability of approximately $2.3
million, recorded in the second quarter of 1996, for certain
environmental obligations assumed in the acquisition of the
Bloomfield refinery. That amount was recorded as an adjustment
to the purchase price and allocated to the assets acquired.
This environmental accrual is recorded in the current and
long-term sections of the Company's Consolidated Balance
Sheets.

     The Company is subject to audit on an ongoing basis of the
various taxes that it pays to federal, state, local and tribal
agencies. These audits may result in assessments or refunds
along with interest and penalties. In some cases the
jurisdictional basis of the taxing authority is in dispute and
is the subject of litigation or administrative appeals. The
Company has received several tax notifications and assessments
from the Navajo Tribe relating to Company operations outside
the boundaries of the Navajo Indian Reservation in an area of
disputed jurisdiction, including a $1.8 million severance tax
assessment issued in November 1991 in connection with crude oil
removed from properties located within this area. The Company
has invoked its appeal rights with the Tribe's Tax Commission
in connection with this assessment and intends to oppose the
assessment. In November 1998, the Company received a notice of
proposed assessment from the Navajo Tribe for an additional
$2.1 million involving severance tax issues similar to those
raised in connection with the $1.8 million assessment. The
Company has responded to the notice of proposed assessment and
intends to oppose any final assessment issued by the Navajo
Tribe in connection with the area of disputed jurisdiction.
Although it is probable that the Company will incur liability
in connection with tax notifications and assessments from the
Navajo Tribe relating to the area of disputed jurisdiction, it
is not possible to reasonably estimate the amount of any
obligation for such taxes at this time because the Navajo
Tribe's authority to impose taxes throughout this area has not
been legally established and all potentially-applicable factual
issues have not been resolved. The Company has accrued a
liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the
assessments. 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. The
Company may potentially be able to request reimbursement from
third party oil lease interest owners in connection with any
severance tax amounts ultimately paid by the Company that
relate to purchases from them.

     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 because of recent low crude oil
prices there has been a reduction in field maintenance work and
drilling activity in the Four Corners area, which has resulted
in a decline in local crude oil production. 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, has been sold and is in the process of being
converted to a natural gas pipeline. The Company did not
purchase 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 pipeline or other transportation means, which could
result in higher acquisition costs. 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 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 is the sale and possible conversion and extension of
the existing Texas-New Mexico crude oil pipeline to transport
refined products from West Texas to New Mexico and ultimately
to Salt Lake City, Utah. Separately, an existing natural gas
liquids ("NGL") pipeline is in the process of being converted
to a refined products pipeline that will be capable of
delivering finished product from Southeastern New Mexico to the
Albuquerque and Four Corners areas. This conversion 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.

     The Company does not presently manufacture gasolines that
satisfy Arizona cleaner burning gasoline ("CBG")
specifications. The specifications are currently applicable to
gasolines sold or used in Maricopa County and a portion of
Yavapai County, and are expected to become effective in Pinal
County by 2001. The Company operates approximately 20 service
stations in these areas, and also conducts wholesale marketing
operations there. The Company currently does not intend to make
the changes necessary to produce CBG because the capital costs
associated with manufacturing large quantities of such
gasolines would be significant in amounts not yet determined by
the Company. The Company has the ability to purchase or
exchange for these gasolines to supply its operations in the
CBG areas, including Pinal County. It is possible that
additional legislation or regulations affecting motor fuel
specifications may be adopted that would impact geographic
areas in which the Company markets its products.

     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. Although originally
scheduled for completion by February 1999, the Company now
believes completion of this phase will be in March 1999.

     (4) Validation (Testing) Phase. In this phase, a test plan
is developed and implemented to validate the remedies selected
in the previous phase. Although originally scheduled for
completion by March 1999, the Company now believes that this
phase will be completed in April 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. Although originally scheduled
for completion by April 1999, the Company now believes
completion of this phase will be in June 1999.

     At the present time, approximately 1,500 items have been
inventoried consisting of software, hardware, processing
equipment and embedded chips. Of these inventoried items, 74%
are Y2K compliant, 20% are not compliant and fall into the
renovation phase, and 6% are of unknown status or are still
being evaluated. The Company believes that none of the items
with unknown status and none of those items that are still
being evaluated, are critical to the operations of the
Company's business. 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.
The Company has, however, 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. 

     Utilizing both internal staff and outside consultants, the
remediation and replacement program for the core financial
systems is well under way and is on target to meet the April
1999 deadline. To date, 50% of the targeted core financial and
other related applications have been renovated, 10% are being
replaced and 40% 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 and chromatographs) and remediation is currently in
process. In this area, 85% percent of the processes are
compliant, 10% are being renovated and 5% 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. Although originally scheduled for completion by
April 1999, the Company now believes completion of this phase
will be in June 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 1,400
business partners, 230 of which have been determined to be
critical. The Company continues to follow up with those who
have not responded. The 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 395 responses to its
compliance questionnaires representing approximately 30% of all
questionnaires sent. The Company has received responses from
25% 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. Through December 31,
1998, the Company had expended approximately $300,000. 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 are in the process of being 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 are being 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 Y2K readiness. Contingency plans are
in various stages of completion. The Company will continue
developing these plans over the next three months for all of
its business units as it completes the renovation, validation
and implementation phases of its Y2K compliance project. 

     The Company continues to assess its most reasonably likely
worst case Y2K scenario. It is the Company's belief that the
greatest potential risk from the Y2K issue could be the
inability of principal suppliers to be Y2K 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 Y2K compliant in a timely manner.
Due to the widespread nature of potential Y2K issues, however,
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 Y2K
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
anticipated improvement of the Company's refining margins in
1999; the effects of programs to reduce operating expenses and
increase purchasing power on the Company's operating results;
the continued impact of the Conoco marketing alliance; the
impact of the Company's new Mustang branding strategy and its
new jobber/open dealer program; the impact of the mandated use
of gasolines satisfying governmentally mandated specifications
on the Company's operations; the availability of
indemnification from third parties; the expansion of the
Company's refining and retail operations through acquisition
and construction; the completion of capital projects identified
in the 1999 capital budget; the adequacy of the Company's
environmental and tax reserves; the Company's ability to
recover tax payments from third parties; the adequacy and cost
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 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>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The information required by this item is incorporated herein by
reference to the section entitled "Other" in the Company's Management's
Discussion and Analysis of Financial Condition and Results of Operations
in Part II, Item 7.
<PAGE>
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Giant Industries, Inc.
Scottsdale, Arizona

     We have audited the accompanying consolidated balance
sheets of Giant Industries, Inc. and subsidiaries (the
"Company") as of December 31, 1998 and 1997, and the related
consolidated statements of earnings (loss), stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial
position of the Company as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.






DELOITTE & TOUCHE LLP

Phoenix, Arizona
March 4, 1999




<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                             GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS
                                                                              December 31,  
                                                                         ---------------------
                                                                           1998        1997
                                                                         ---------   ---------
                                                                         (In thousands, except
                                                                       share and per share data)
<S>                                                                      <C>         <C>
ASSETS

Current assets:
  Cash and cash equivalents..........................................    $  55,697   $  82,592
  Receivables:
     Trade, less allowance for doubtful accounts of $460 and $464....       39,050      47,548
     Income tax refunds..............................................          417         248
     Other...........................................................       10,728       9,274
                                                                         ---------   ---------
                                                                            50,195      57,070
                                                                         ---------   ---------
  Inventories........................................................       51,349      57,598
  Prepaid expenses and other.........................................        7,860       7,016
  Deferred income taxes..............................................        6,625       2,800
                                                                         ---------   ---------
     Total current assets............................................      171,726     207,076
                                                                         ---------   ---------
Property, plant and equipment........................................      439,940     402,600
  Less accumulated depreciation and amortization.....................     (138,008)   (120,773)
                                                                         ---------   ---------
                                                                           301,932     281,827
                                                                         ---------   ---------
Goodwill, less accumulated amortization of $2,140 and $1,341.........       22,902      18,363
Other assets.........................................................       29,225      28,105
                                                                         ---------   ---------
                                                                         $ 525,785   $ 535,371
                                                                         =========   =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt..................................    $   1,200   $     562
  Accounts payable...................................................       42,903      55,546
  Accrued expenses...................................................       36,519      39,243
                                                                         ---------   ---------
     Total current liabilities.......................................       80,622      95,351
                                                                         ---------   ---------
Long-term debt, net of current portion...............................      282,484     275,557
Deferred income taxes................................................       26,793      25,887
Other liabilities and deferred income................................        8,184       5,109
Commitments and contingencies (Notes 17 and 18)
Stockholders' equity:
  Preferred stock, par value $.01 per share, 
    10,000,000 shares authorized, none issued
  Common stock, par value $.01 per share, 50,000,000 
    shares authorized, 12,232,367 shares issued......................          122         122
  Additional paid-in capital.........................................       72,699      72,699
  Retained earnings..................................................       69,391      73,256
                                                                         ---------   ---------
                                                                           142,212     146,077
  Less common stock in treasury - at cost, 
    1,393,600 and 1,239,100 shares...................................      (14,510)    (12,610)
                                                                         ---------   ---------
                                                                           127,702     133,467
                                                                         ---------   ---------
                                                                         $ 525,785   $ 535,371
                                                                         =========   =========

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                  GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

                                                               Year Ended December 31,   
                                                      -----------------------------------------
                                                         1998           1997           1996
                                                      -----------    -----------    -----------
                                                        (In thousands, except per share data)
<S>                                                   <C>            <C>            <C>
Net revenues.......................................   $   642,504    $   657,278    $   499,184
Cost of products sold..............................       465,605        487,748        361,864
                                                      -----------    -----------    -----------
Gross margin.......................................       176,899        169,530        137,320

Operating expenses.................................       102,538         85,177         64,315
Depreciation and amortization......................        29,166         23,991         17,673
Selling, general and administrative expenses.......        25,288         19,256         15,602
                                                      -----------    -----------    -----------
Operating income...................................        19,907         41,106         39,730
Interest expense...................................       (25,464)       (18,139)       (12,318)
Interest and investment income.....................         1,831          2,133            771
                                                      -----------    -----------    -----------
Earnings (loss) from continuing operations 
  before income taxes..............................        (3,726)        25,100         28,183
Provision (benefit) for income taxes...............        (1,509)         9,806         11,132
                                                      -----------    -----------    -----------
Earnings (loss) from continuing operations.........        (2,217)        15,294         17,051

Discontinued operations:
  Loss on disposal of oil and gas 
    operations (net of taxes)......................                                         (13)
                                                      -----------    -----------    -----------
Net earnings (loss)................................   $    (2,217)   $    15,294    $    17,038
                                                      ===========    ===========    ===========
Earnings (loss) per common share - basic:
  Continuing operations............................   $     (0.20)   $      1.38    $      1.52
  Discontinued operations..........................                                           
                                                      -----------    -----------    ----------- 
  Net earnings (loss)..............................   $     (0.20)   $      1.38    $      1.52
                                                      ===========    ===========    ===========
Earnings (loss) per common share
  - assuming dilution:
  Continuing operations............................   $     (0.20)   $      1.37    $      1.50
  Discontinued operations..........................                                           
                                                      -----------    -----------    ----------- 
  Net earnings (loss)..............................   $     (0.20)   $      1.37    $      1.50
                                                      ===========    ===========    ===========

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                    GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                        Unearned
                                                                        compen-
                                    Common stock                        sation                          Total
                                  ---------------- Additional           related to    Treasury stock    stock-
                                    Shares    Par   paid-in   Retained  restricted  ------------------- holders'
                                    issued   value  capital   earnings    stock      Shares     Cost    equity
                                  ---------- ----- ---------- --------  ----------  --------- --------- --------
                                                        (In thousands, except number of shares)
<S>                               <C>         <C>   <C>       <C>        <C>        <C>       <C>       <C>
Balances, January 1, 1996.......  12,188,629  $122  $72,389   $45,373    $ (151)      939,500 $ (8,001) $109,732
Purchase of treasury stock......                                                      184,000   (2,784)   (2,784)
Stock options exercised.........      32,750            216                                                  216
Compensation related to
  restricted stock awards.......                         12                 151                              163
Restricted stock award
  fractional shares
  redeemed/canceled.............        (12)
Dividends declared
  - $0.20 per share.............                               (2,241)                                    (2,241)
Net earnings....................                               17,038                                     17,038
                                  ----------  ----  -------   -------    ------     --------- --------  --------
Balances, December 31, 1996.....  12,221,367   122   72,617    60,170               1,123,500  (10,785)  122,124
Purchase of treasury stock......                                                      115,600   (1,825)   (1,825)
Stock options exercised.........      11,000             82                                                   82
Dividends declared
  - $0.20 per share.............                               (2,208)                                    (2,208)
Net earnings....................                               15,294                                     15,294
                                  ----------  ----  -------   -------    ------     --------- --------  --------
Balances, December 31, 1997.....  12,232,367   122   72,699    73,256               1,239,100  (12,610)  133,467
Purchase of treasury stock......                                                      154,500   (1,900)   (1,900)
Dividends declared
  - $0.15 per share.............                               (1,648)                                    (1,648)
Net loss........................                               (2,217)                                    (2,217)
                                  ----------  ----  -------   -------    ------     --------- --------  --------
Balances, December 31, 1998.....  12,232,367  $122  $72,699   $69,391    $          1,393,600 $(14,510) $127,702
                                  ==========  ====  =======   =======    ======     ========= ========  ========

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>



<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                         Year Ended December 31,    
                                                                    --------------------------------
                                                                      1998        1997        1996 
                                                                    --------    --------    -------- 
                                                                               (In thousands)
<S>                                                                 <C>         <C>         <C>
Cash flows from operating activities:
  Net earnings (loss)...........................................    $ (2,217)   $ 15,294    $ 17,038
  Adjustments to reconcile net earnings (loss) to 
     net cash provided by continuing operating activities:
     Loss from discontinued operations..........................                                  13
     Depreciation and amortization..............................      29,166      23,991      17,673
     Deferred income taxes......................................      (2,920)      5,681       6,514
     Restricted stock award compensation........................                                 163
     Other......................................................         445      (1,756)        543
     Changes in operating assets and liabilities:
       Decrease (increase) in receivables.......................       7,028      (7,876)     (6,718)
       Decrease (increase) in inventories.......................       5,811     (13,494)      4,355
       (Increase) decrease in prepaid expenses and other........        (867)       (156)        647
       (Decrease) increase in accounts payable..................     (12,596)      2,784       1,644
       Increase in accrued expenses.............................       3,042       6,824         883
                                                                    --------    --------    --------
Net cash provided by continuing operating activities............      26,892      31,292      42,755
                                                                    --------    --------    --------
Cash flows from investing activities:
  Acquisition of businesses, net of cash received...............     (38,205)    (47,168)
  Purchases of property, plant and equipment and other assets...     (60,320)    (35,752)    (27,468)
  Refinery acquisition contingent payment.......................      (7,243)     (6,910)
  Proceeds from sale-leaseback transaction......................      50,124
  Proceeds from sale of property, plant and 
    equipment and other assets..................................       3,816       4,606       4,587
  Investment in note receivable.................................      (5,000)
  Proceeds from sale of discontinued operations.................                              24,106
  Net cash used by discontinued operations......................                              (3,831)
                                                                    --------    --------    -------- 
Net cash used by investing activities...........................     (56,828)    (85,224)     (2,606)
                                                                    --------    --------    --------
Cash flows from financing activities:
  Proceeds of long-term debt....................................      46,000     283,100      10,000
  Payments of long-term debt....................................     (38,435)   (151,924)    (42,218)
  Purchase of treasury stock....................................      (1,900)     (1,825)     (2,784)
  Deferred financing costs......................................        (425)     (3,319)
  Payment of dividends..........................................      (2,199)     (2,218)     (2,284)
  Proceeds from exercise of stock options.......................                      82         216
                                                                    --------    --------    -------- 
Net cash provided (used) by financing activities................       3,041     123,896     (37,070)
                                                                    --------    --------    --------
Net (decrease) increase in cash and cash equivalents............     (26,895)     69,964       3,079
Cash and cash equivalents:  
  Beginning of year.............................................      82,592      12,628       9,549
                                                                    --------    --------    -------- 
  End of year...................................................    $ 55,697    $ 82,592    $ 12,628
                                                                    ========    ========    ========
</TABLE>

     Significant Noncash Investing and Financing Activities. During
1998, approximately $2,039,000 was incurred as a contingent payment
related to the 1995 acquisition of the Bloomfield refinery. During
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 the Thriftway Assets. In addition, approximately
$7,243,000 was incurred as a contingent payment related to the
acquisition of the Bloomfield refinery. During 1996, the Company
accrued $2,250,000 for estimated preacquisition environmental
liabilities assumed and $6,910,000 was incurred as a contingent
payment, both related to the acquisition of the Bloomfield
refinery. 

The accompanying notes are an integral part of these consolidated 
financial statements.

<PAGE>
<PAGE>
             GIANT INDUSTRIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES:

ORGANIZATION

     Giant Industries, Inc. ("Giant" or the "Company") is
organized through two wholly-owned subsidiaries, Giant
Industries Arizona, Inc. ("Giant Arizona") and Giant Exploration
and Production Company ("Giant E&P"). Giant Arizona, along with
a number of its wholly-owned subsidiaries, is engaged in the
refining and marketing business. In addition, through its
wholly-owned subsidiary Phoenix Fuel Co., Inc. ("Phoenix Fuel"),
Giant Arizona operates an independent industrial/commercial
petroleum products distribution operation. Substantially all of
the oil and gas assets of Giant E&P were sold in August 1996.

DESCRIPTION OF BUSINESS

     The Company operates primarily as an independent refiner
and marketer of petroleum products. The Company's principal
business is the refining of crude oil into petroleum products
which are sold through branded retail outlets as well as through
distributors, industrial/commercial accounts and major oil
companies. The Company is the largest refiner and marketer of
petroleum products in the Four Corners area of the southwestern
United States where New Mexico, Arizona, Colorado and Utah
adjoin. The Company has two operating refineries in New Mexico.
The Ciniza refinery, with a crude oil throughput capacity of
20,800 barrels per day ("bpd") and a total capacity including
natural gas liquids of 26,000 bpd, is located near Gallup, New
Mexico. In October 1995, the Company acquired the Bloomfield
refinery, with a crude oil throughput capacity of 18,000 bpd and
a total capacity including natural gas liquids of 18,600 bpd,
located in Bloomfield, New Mexico.

     At December 31, 1998, the Company owned and/or operated 166
retail service station/convenience stores and a travel center.
These operations sell gasoline, diesel fuel and merchandise to
the general public.

     In addition, through Phoenix Fuel, the largest independent
petroleum products distributor in the state of Arizona, the
Company distributes gasoline, diesel fuel and various lubricants
to industrial and commercial accounts.

     (See Notes 2 and 3 for further discussion of operations and
recent acquisitions and dispositions.)

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts
of Giant and all of its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these
estimates.

NET REVENUES

     Revenues are recognized from sales when product ownership
is transferred to the customer. Excise and other similar taxes
are excluded from net revenues.

STATEMENTS OF CASH FLOWS

     All highly liquid instruments with an original maturity of
three months or less are considered to be cash equivalents.

FUTURES AND OPTION CONTRACTS

     The Company periodically enters into futures or option
contracts to hedge its exposure to price fluctuations on crude
oil and refined products. Gains and losses on hedge contracts
are deferred and reported as a component of the related
transaction. For the purposes of the Statement of Cash Flows,
hedging transactions are considered to be operating activities.

INTEREST RATE SWAPS

     In the past, interest rate management techniques such as
swaps and caps were entered into in order to effectively manage
and reduce net interest expense. Net settlements on swap
transactions are reported as an adjustment to net interest
expense over the life of the associated debt instruments. These
debt instruments were repaid in 1996, and the remaining net
settlement proceeds were recorded as an adjustment to interest
expense.

CONCENTRATION OF CREDIT RISK

     Credit risk with respect to customer receivables is
concentrated in a small geographic area in which the Company
operates and relates primarily to customers in the oil and gas
industry. To minimize this risk, the Company performs ongoing
credit evaluations of its customers' financial position and
requires collateral, such as letters of credit, in certain
circumstances.

INVENTORIES

     Inventories are stated at the lower of cost or market.
Costs for crude oil and refined products produced by the
refineries, and the lubricants, refined products and other
merchandise of Phoenix Fuel, are determined by the last-in,
first-out ("LIFO") method. Costs for exchange and terminal
refined products and shop supplies are determined by the
first-in, first-out ("FIFO") method. Costs for merchandise
inventories at retail locations are determined by the retail
inventory method.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost and are
depreciated on the straight-line method over their respective
estimated useful lives. The estimated useful lives for the
various categories of property, plant and equipment are:

     Buildings and improvements           7-30 years
     Machinery and equipment              7-24 years
     Pipelines                              30 years
     Furniture and fixtures               2-15 years
     Vehicles                              3-7 years

     Routine maintenance, repairs and replacement costs are
charged against earnings as incurred. Turnaround costs, which
consist of complete shutdown and inspection of significant units
of the refineries at intervals of two or more years for
necessary repairs and replacements, are deferred and amortized
over the period until the next expected shutdown which generally
ranges from twenty-four to forty-eight months depending on the
type of shutdown and the unit involved. Expenditures which
materially increase values, expand capacities or extend useful
lives are capitalized. Interest expense is capitalized as part
of the cost of constructing major facilities and equipment. 

GOODWILL

     Goodwill is carried at cost less accumulated amortization.
Goodwill is amortized on the straight-line method over the
periods of expected benefit ranging from fifteen to thirty
years. 

LONG-LIVED ASSETS

     In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, the Company reviews the carrying
values of its long-lived assets and identifiable intangibles for
possible impairment whenever events or changes in circumstances
indicate that the carrying amount of assets to be held and used
may not be recoverable. For assets to be disposed of, the
Company reports long-lived assets and certain identifiable
intangibles at the lower of carrying amount or fair value less
cost to sell.

TREASURY STOCK

     The Company's Board of Directors has authorized the
repurchase of up to 2,500,000 shares of the Company's common
stock. These 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. Through the end of 1998, the Company
had repurchased 1,393,600 shares at a cost of approximately
$14,510,000. These shares are being treated as treasury shares.
At December 31, 1998, the Company was unable to repurchase
additional shares of common stock under this program due to
restrictions under the Indenture supporting its 9 3/4% senior
subordinated notes.

ENVIRONMENTAL EXPENDITURES

     Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable
and the costs can be reasonably estimated. Environmental
liabilities are not discounted to their present value and are
recorded without consideration of potential recoveries from
third parties. Subsequent adjustments to estimates, which may be
significant, may be made as more refined information becomes
available or as circumstances change. (See Note 18.)

INCOME TAXES

     The provision for income taxes is based on earnings
reported in the financial statements. Deferred income taxes are
provided to reflect temporary differences between the basis of
assets and liabilities for financial reporting purposes and
income tax purposes, as well as the effects of tax credits.

EARNINGS (LOSS) PER COMMON SHARE

     Earnings (loss) per share are calculated in accordance with
the Financial Accounting Standards Board ("FASB") SFAS No. 128,
"Earnings Per Share". Basic earnings (loss) per common share is
computed on the weighted average number of shares of common
stock outstanding during each period. Earnings (loss) 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, unless such calculation
is antidilutive. (See Note 5.)

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which will be
effective for Giant's financial statements as of January 1,
2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. It requires that entities record all
derivatives as either assets or liabilities, measured at fair
value, with any change in fair value recognized in earnings or
in other comprehensive income, depending on the use of the
derivative and whether it qualifies for hedge accounting. If
certain conditions are met, a derivative may be specifically
designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or
a foreign-currency- denominated forecasted transaction.

     Under this Statement, an entity that elects to apply hedge
accounting is required to establish at the inception of the
hedge the method it will use for assessing the effectiveness of
the hedging derivative and the measurement approach for
determining the ineffective aspect of the hedge. Those methods
must be consistent with the entity's approach to managing risk.
The Company has not completed evaluating the effects this
Statement will have on its financial reporting and disclosures. 

     In June 1997, the FASB issued SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information", which
is effective for fiscal 1998. This Statement establishes
standards for the way that public enterprises report information
about operating segments in annual and interim financial
statements. It also establishes standards for disclosures about
products and services, geographic areas and major customers. The
Company has implemented this Statement and the required
disclosures are made in Note 2.

     In June 1997, the FASB also issued SFAS No. 130, "Reporting
Comprehensive Income", which became effective in fiscal 1998.
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 adopted this statement, but
has no items of other comprehensive income for the periods
presented in these financial statements.

RECLASSIFICATIONS

     Certain reclassifications have been made to the 1997 and
1996 financial statements and notes to conform to the statement
classifications used in 1998.

<PAGE>
<PAGE>
NOTE 2--COMPANY OPERATIONS:

     In 1997, the FASB issued Statement No. 131, "Disclosures
about Segments of an Enterprise and Related Information", which
the Company implemented effective December 31, 1998. This
Statement establishes new standards for defining the Company's
segments and disclosing information about them. It requires that
the segments be based on management's internal organizational
decision-making structure.

     The Company is organized into three operating segments
based on manufacturing and marketing criteria. These segments
are the Refining Group, the Retail Group and Phoenix Fuel. A
description of each segment and principal products and
operations are as follows: 

     --  Refining Group: The Refining Group consists of the
Company's two refineries, its fleet of crude oil and finished
product truck transports, its crude oil pipeline gathering
operations and its finished product terminaling operations. The
Company's two refineries manufacture various grades of gasoline,
diesel fuel, jet fuel and other products from crude oil, other
feedstocks and blending components. These products are sold
through company-operated retail facilities, independent
wholesalers and retailers, industrial/commercial accounts and
sales and exchanges with major oil companies. Crude oil, other
feedstocks and blending components are purchased from third
party suppliers.

     -- Retail Group: The Retail Group consists of service
station/convenience stores and one travel center. These
operations sell various grades of gasoline, diesel fuel, general
merchandise and food products to the general public through
retail locations. The petroleum fuels sold by the Retail Group
are supplied by the Refining Group, which either manufactures
these refined products or acquires them through exchange
arrangements, third party purchases, or from Phoenix Fuel.
General merchandise and food products are obtained from third
party suppliers.

     -- Phoenix Fuel: Phoenix Fuel is an industrial/commercial
petroleum fuels and lubricants distribution operation, which
includes a number of bulk distribution plants, an unattended
fleet fueling ("cardlock") operation and a fleet of finished
product truck transports. The petroleum fuels and lubricants
sold are primarily obtained from third party suppliers and to a
lesser extent from the Refining Group.

     Operations that are not included in any of the three
segments are included in the category "Other" and consist
primarily of corporate office operations, including selling,
general and administrative expenses of $24,412,000, $17,863,000
and $16,125,000 for 1998, 1997 and 1996, respectively.

     Operating income for each segment consists of net revenues
less cost of products sold, operating expenses, depreciation and
amortization and the segment's selling, general and
administrative expenses. The sales between segments are made at
market prices. Cost of products sold reflect current costs
adjusted for LIFO and lower of cost or market inventory
adjustments.

     The total assets of each segment consist primarily of net
property, plant and equipment, inventories, accounts receivable
and other assets directly associated with the segment's
operations. Included in the total assets of the corporate office
operations are a majority of the Company's cash and cash
equivalents, various accounts receivable, net property, plant
and equipment and other long-term assets.

     Disclosures regarding the Company's reportable segments
under SFAS No. 131 with reconciliations to consolidated totals
are presented on the following page.


<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SEGMENT DISCLOSURES:

                                       As of and for the Year Ended December 31, 1998     (In thousands)
                                       -----------------------------------------------------------------
                                       Refining   Retail    Phoenix            Reconciling
                                        Group     Group      Fuel     Other      Items      Consolidated
                                       --------  --------  --------  -------   -----------  ------------
<S>                                    <C>       <C>       <C>       <C>        <C>           <C>
Customer net revenues...............   $181,033  $271,775  $189,168  $    528                 $642,504
Intersegment net revenues...........    131,599     1,876     7,343             $(140,818)
                                       --------  --------  --------  --------   ---------     --------
Total net revenues..................   $312,632  $273,651  $196,511  $    528   $(140,818)    $642,504
                                       --------  --------  --------  --------   ---------     --------
Operating income....................   $ 24,994  $ 14,017  $  4,780  $(23,884)                $ 19,907
Interest expense....................                                                           (25,464)
Interest income.....................                                                             1,831
                                                                                              --------
Loss from continuing
 operations before income taxes.....                                                          $ (3,726)
                                                                                              --------
Depreciation and amortization.......   $ 14,305  $  9,298  $  1,976  $  3,587                 $ 29,166
Total assets........................   $241,898  $123,086  $ 64,315  $ 96,486                 $525,785
Capital expenditures................   $ 40,763  $ 16,325  $  2,180  $    934                 $ 60,202
</TABLE>

<TABLE>
<CAPTION>
                                       As of and for The Year Ended December 31, 1997     (In thousands)
                                       -----------------------------------------------------------------
                                       Refining   Retail    Phoenix            Reconciling
                                        Group     Group      Fuel     Other      Items      Consolidated
                                       --------  --------  --------  -------   -----------  ------------
<S>                                    <C>       <C>       <C>       <C>        <C>           <C>
Customer net revenues...............   $309,940  $214,864  $132,047  $    427                 $657,278
Intersegment net revenues...........    118,748     1,994     4,496             $(125,238)
                                       --------  --------  --------  --------   ---------     --------
Total net revenues..................   $428,688  $216,858  $136,543  $    427   $(125,238)    $657,278
                                       --------  --------  --------  --------   ---------     --------
Operating income....................   $ 47,873  $  7,155  $  3,514  $(17,436)                $ 41,106
Interest expense....................                                                           (18,139)
Interest income.....................                                                             2,133
                                                                                              --------
Earnings from continuing
 operations before income taxes.....                                                          $ 25,100
                                                                                              --------
Depreciation and amortization.......   $ 13,740  $  6,494  $    935  $  2,822                 $ 23,991
Total assets........................   $229,663  $128,200  $ 65,227  $112,281                 $535,371
Capital expenditures................   $ 19,366  $ 11,790  $  1,696  $  2,343                 $ 35,195
</TABLE>

<TABLE>
<CAPTION>
                                       As of and for The Year Ended December 31, 1996     (In thousands)
                                       -----------------------------------------------------------------
                                       Refining   Retail    Phoenix            Reconciling
                                        Group     Group      Fuel     Other      Items      Consolidated
                                       --------  --------  --------  -------   -----------  ------------
<S>                                    <C>       <C>       <C>       <C>        <C>           <C>
Customer net revenues...............   $339,479  $159,332            $    373                 $499,184
Intersegment net revenues...........     97,933     1,456                       $ (99,389)
                                       --------  --------  --------  --------   ---------     --------
Total net revenues..................   $437,412  $160,788            $    373   $ (99,389)    $499,184
                                       --------  --------  --------  --------   ---------     --------
Operating income....................   $ 51,835  $  3,647            $(15,752)                $ 39,730
Interest expense....................                                                           (12,318)
Interest income.....................                                                               771
                                                                                              --------
Earnings from continuing
 operations before income taxes.....                                                          $ 28,183
                                                                                              --------
Depreciation and amortization.......   $ 11,690  $  4,215            $  1,768                 $ 17,673
Capital expenditures................   $ 12,354  $ 14,018            $    704                 $ 27,076


The Company had no customers whose revenues exceeded 10% of consolidated net revenues.
</TABLE>
<PAGE>
<PAGE>
NOTE 3--ACQUISITIONS AND DISPOSITIONS:

     In February 1998, the Company purchased seven service
station/convenience stores, two cardlock commercial fleet fueling
facilities, a gasoline and diesel storage bulk plant and related
transportation equipment from DeGuelle Oil Company and DeGuelle
Enterprises (the "DeGuelle Assets") for $9,750,000. All of the
facilities are located in southwestern Colorado and are supplied
by the Company's refineries. For the fiscal year ended December
31, 1997, prior to the purchase by the Company, these operations
had sales of approximately 10,000,000 gallons of gasoline and
diesel fuel in addition to 35,000 gallons of lubricants.

     In April 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. For the year ended
December 31, 1998, the Company wrote off approximately $1,400,000
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. 

     In July 1998, the Company completed the acquisition of
thirty-two service station/convenience stores, equipment, fuel
truck/transports, and undeveloped real estate from Kaibab
Industries, Inc. (the "Kaibab Assets") for approximately
$28,400,000. 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
70,000,000 gallons of refined petroleum products for the fiscal
year ended September 30, 1997.

     In May 1997, the Company completed the acquisition of
ninety-six retail service station/convenience stores, seven
additional retail locations for future development, certain
petroleum transportation and maintenance assets, options to
acquire service station/convenience stores and other related
assets (the "Thriftway Assets"). The assets were acquired from
Thriftway Marketing Corp. and Clayton Investment Company and from
entities related to such sellers (collectively, "Thriftway").

     Thirty-two of the Thriftway service station/convenience
stores, as well as the seven retail locations for future
development, the transportation and maintenance assets, the
options to acquire service station/convenience stores and other
related assets were purchased for approximately $19,100,000 in
cash and for an office building and a truck maintenance shop with
net book values totaling approximately $1,300,000. The remaining
sixty-four service station/convenience stores and related assets
were leased for a period of ten years with options to purchase
them during the ten year period for approximately $22,904,000.
The lease obligations were accounted for as capital leases.
During 1998, the Company purchased fifty-four of these retail
service station/convenience stores for approximately $14,669,000.
The remaining 10 stores continue to be leased under the original
terms, and the Company intends to purchase them pursuant to the
options to purchase during the remaining lease period for
approximately $8,235,000. 

     The service station/convenience stores acquired from
Thriftway are retail outlets that sell various grades of
gasoline, diesel fuel and merchandise to the general public and
are located in New Mexico, Arizona, Colorado and Utah, in or
adjacent to the Company's primary market area.

     The Company also entered into a consignment agreement with
Thriftway to supply finished product to sixteen service
station/convenience stores operated by Thriftway which are
located on the Navajo, Ute and Zuni Indian Reservations and has
options to purchase these service station/convenience stores. The
Company has also entered into long-term supply arrangements with
Thriftway to provide gasoline and diesel fuel to other service
stations in the area that will continue to be operated by
Thriftway.

     In late 1997, the Company entered into an arrangement to
sell some of the ninety-six units and additional retail locations
acquired or leased from Thriftway. Sixteen of these units and two
of the additional retail locations were sold in early 1998 for
approximately $1,700,000.

     In June 1997, the Company purchased all of the issued and
outstanding common stock of Phoenix Fuel from J. W. Wilhoit, as
Trustee of the Wilhoit Trust Agreement dated December 26, 1974
and other related entities for approximately $30,000,000 in cash.

     Phoenix Fuel is an independent industrial/commercial
petroleum products distributor with wholesale and cardlock fuel
sales. Products sold include gasoline, diesel fuel, burner fuel,
jet fuel, aviation fuel and kerosene. In addition, Phoenix Fuel
distributes oil and lubricants such as motor oil, hydraulic oil,
gear oil, cutting oil and grease. 

     At December 31, 1998, Phoenix Fuel had eight bulk petroleum
distribution plants, twenty-one cardlock fueling operations, a
lubricant storage and distribution facility and operated a fleet
of thirty-four finished product truck transports. These assets
and related operations are located throughout the state of
Arizona.

     All of the acquisitions have been accounted for using the
purchase method. Accordingly, the Company's purchase price has
been allocated to acquired assets and assumed liabilities based
on estimated fair values. Results of operations of the acquired
businesses from their respective dates of acquisition have been
included in the Company's Consolidated Statements of Earnings
(Loss) for the years ended December 31, 1998 and 1997. The
Company recorded goodwill of approximately $17,000,000 for the
acquisition of Phoenix Fuel, $4,600,000 for the acquisition of
the Kaibab Assets and $1,700,000 for the acquisition of the
Thriftway Assets. The Company is amortizing goodwill related to
the Phoenix Fuel acquisition over 30 years and goodwill related
to the Kaibab and Thriftway Assets over 15 years. 

     The Thriftway and Phoenix Fuel acquisitions were funded
under the Company's unsecured credit agreement, as amended, with
a group of banks. This facility was replaced in 1998 with a
secured credit agreement. The amounts borrowed were subsequently
repaid with the issuance of $150,000,000 of 9% senior
subordinated notes (the "9% Notes") in August 1997. The proceeds
of the 9% Notes were also used for the DeGuelle and Kaibab
acquisitions and the purchase of the assets related to the
Thriftway capital lease obligations.

     The following unaudited pro forma information for the years
ended December 31, 1998 and 1997 combine the historical financial
information for the Company, the Kaibab Assets, the DeGuelle
Assets, the Thriftway Assets and Phoenix Fuel assuming these
acquisitions were consummated at the beginning of the periods
presented, as well as the sale of the 9% Notes and the
application of the proceeds as described in Note 10, assuming
such transaction had occurred at the beginning of the periods.
The unaudited pro forma information includes the results of
operations of the Company, the Kaibab Assets, the DeGuelle
Assets, the Thriftway Assets and Phoenix Fuel, along with
adjustments which give effect to events that are directly
attributable to the transactions and which are expected to have a
continuing impact.

<TABLE>
<CAPTION>
                                                                              Pro Forma
                                                                       (Unaudited, In thousands,
                                                                        except per share data)
                                                                       ------------------------
                                                                          1998          1997
                                                                       ----------    ----------
<S>                                                                     <C>           <C>
Net revenues.......................................................     $668,506      $904,229
Earnings (loss) from continuing operations before income taxes.....     $ (2,163)     $ 26,759
Net earnings (loss)................................................     $ (1,279)     $ 16,298
Net earnings (loss) per common share - basic.......................     $  (0.12)     $   1.47
Net earnings (loss) per common share - assuming dilution...........     $  (0.12)     $   1.46
</TABLE>

     This unaudited pro forma financial information does not
purport to represent the results of operations that actually
would have resulted had the purchases occurred on the date
specified, nor should it be taken as indicative of the future
results of operations.

     In December 1998, the Company and Franchise Finance
Corporation of America ("FFCA") completed a sale-leaseback
transaction. Under the terms of the Sale and Lease Agreement (the
"Agreement"), FFCA purchased eighty-three service
station/convenience stores from the Company for approximately
$51,800,000, including six of the seven DeGuelle Asset units and
twenty-six of the Kaibab Asset units, with the remainder having
been acquired as part of the acquisition of the Thriftway Assets.
The Company in turn leased the eighty-three service
station/convenience stores back from FFCA under an operating
lease arrangement with an initial term of fifteen years and three
separate options to continue the lease for successive periods of
five years. Initial annual rental payments under the lease
agreement are approximately $5,100,000 and will be adjusted
upward by six percent on the second anniversary of the Agreement
and every second anniversary thereafter, on a compounded basis,
during the initial lease term and any extension thereof. The
Company has a right of first refusal to acquire the leased assets
upon an offer to purchase the assets by a third party. Net
proceeds to the Company, after expenses, were approximately
$50,100,000. The Company recorded a gain of approximately
$4,000,000 on the sale of the assets. This gain has been deferred
and will be amortized over the initial lease period of fifteen
years. The deferred gain is included in "Other Liabilities and
Deferred Income" in the Company's Consolidated Balance Sheet at
December 31, 1998.

     In accordance with the Indentures supporting the Company's
9% Notes and $100,000,000 of 9 3/4% senior subordinated notes
(the "9 3/4% Notes", and collectively with the 9% Notes, the
"Notes"), the Company must either use the net proceeds from the
FFCA transaction to make a permanent reduction in senior
indebtedness (as defined in the respective Indentures), or make
an investment in capital assets used in the Company's principal
business (as defined in the respective Indentures). The Company
has 360 days in which to use the net proceeds for such a purpose
under the terms of the Indenture supporting the 9% Notes, and has
270 days under the terms of the Indenture supporting the 9 3/4%
Notes. In each case, upon completion of the specified period, if
all of the net proceeds have not been used for such a purpose,
the Company may be obligated, under certain circumstances, to
repurchase the respective Notes with the unused portion. The
Company anticipates that it will use the net proceeds from the
FFCA transaction to invest in capital assets or to reduce senior
indebtedness before the applicable periods expire. 

     In December 1997, the Company completed the sale of its
ethanol processing plant in Portales, New Mexico for $4,000,000
in cash. The Company incurred a pretax loss of approximately
$1,200,000 on the disposition. In 1997 and 1996, the Company
incurred expenses of approximately $307,000 and $468,000,
respectively, to maintain this facility in addition to
approximately $606,000 and $683,000, respectively, in
depreciation.

     In October 1995, the Company completed the purchase of the
Bloomfield refinery along with related pipeline and
transportation assets for $55,000,000 from Gary-Williams Energy
Co. and its wholly-owned subsidiary, Bloomfield Refining Company
("BRC"). The purchase agreement provides for potential contingent
payments to be made to BRC over approximately six years from the
acquisition date, not to exceed a present value of $25,000,000,
should certain criteria be met. These contingent payments are
considered to be additional purchase price and will be allocated
to the assets acquired in the same proportions as the original
purchase price was allocated, not to exceed the estimated current
replacement cost, and amortized over the estimated remaining life
of the assets. At December 31, 1998, 1997 and 1996, the Company
had accrued $2,039,000, $7,243,000, and $6,910,000, respectively,
under this arrangement relating to 1998, 1997 and 1996
operations. In addition, the Company accrued $2,250,000 in 1996
relating to certain environmental obligations assumed in the
purchase, which amount was also considered to be additional
purchase price.

<PAGE>
<PAGE>
NOTE 4--DISCONTINUED OPERATIONS:

     In August 1996, the Company completed the sale of
substantially all of its oil and gas assets for $25,500,000. The
transaction was structured so that the Company retained only the
oil and gas properties that would generate future coal seam gas
tax credits under Section 29 of the Internal Revenue Code. As the
reserves related to these properties are produced by the buyer,
the tax credits generated are realized by the Company and can be
used to offset taxable income.



<PAGE>
<PAGE>
NOTE 5--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 earnings (loss) from continuing operations
as required by SFAS No. 128:

<TABLE>
<CAPTION>
                                                                   
                                                                     Year Ended December 31, 
                            ----------------------------------------------------------------------------------------------------
                                          1998                              1997                              1996
                            --------------------------------  --------------------------------  --------------------------------
                                                       Per                               Per                               Per
                               Loss         Shares    Share    Earnings      Shares     Share    Earnings      Shares     Share
                            (Numerator) (Denominator) Amount  (Numerator) (Denominator) Amount  (Numerator) (Denominator) Amount
                            ----------- ------------- ------  ----------- ------------- ------  ----------- ------------- ------
<S>                         <C>          <C>          <C>     <C>          <C>          <C>     <C>          <C>          <C>
Earnings (loss) per common 
  share - basic
  Earnings (loss) from
    continuing operations   $(2,217,000) 10,950,991   $(0.20) $15,294,000  11,050,853   $1.38   $17,051,000  11,220,380   $1.52
  Effect of dilutive 
    stock options                                 *                           124,041                           115,964
                            -----------  ----------   ------  -----------  ----------   -----    ----------  ----------   -----
Earnings (loss) per common 
  share - assuming dilution
  Earnings (loss) from 
    continuing  operations  $(2,217,000) 10,950,991   $(0.20) $15,294,000  11,174,894   $1.37   $17,051,000  11,336,344   $1.50
                            ===========  ==========   ======  ===========  ==========   =====    ==========  ==========   =====
</TABLE> 
   

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

     There were no transactions subsequent to December 31, 1998,
that if the transactions had occurred before December 31, 1998,
would materially change the number of common shares or potential
common shares outstanding as of December 31, 1998.
<PAGE>
<PAGE>
NOTE 6 NOTE RECEIVABLE:

     During the year ended December 31, 1998, the Company loaned
$5,000,000 to its Chairman and Chief Executive Officer. The
Company's initial loan in the amount of $4,000,000 was
subsequently increased by $1,000,000. The loan is evidenced by an
unsecured promissory note bearing interest at prime plus 2% on
$4,000,000 from September 17, 1998 through December 22, 1998, and
prime plus 3% on $5,000,000 thereafter. An initial interest
payment was paid on February 28, 1999 for interest due through
December 31, 1998. Subsequent interest is due and payable
semi-annually on each June 30 and December 31 of each year until
February 28, 2001, at which time all outstanding principal and
interest is fully due and payable. This loan is included in
"Other Assets" in the Company's Consolidated Balance Sheet at
December 31, 1998.



<PAGE>
<PAGE>
NOTE 7--INVENTORIES:

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                  December 31,  
                                              ------------------- 
                                               1998        1997
                                              -------     -------
                                                 (In thousands)
<S>                                           <C>         <C>
First-in, first-out ("FIFO") method:
  Crude oil..............................     $ 8,419     $12,736
  Refined products.......................      17,956      25,562
  Refinery and shop supplies.............       9,648       7,530
  Merchandise............................       4,568       4,640
Retail method:
  Merchandise............................       7,460       5,840
                                              -------     -------
     Subtotal............................      48,051      56,308
Adjustment for last-in, 
  first-out ("LIFO") method..............      14,758       4,220
Allowance for lower of cost or market....     (11,460)     (2,930)
                                              -------     -------
     Total...............................     $51,349     $57,598
                                              =======     =======
</TABLE>

     The portion of inventories valued on a LIFO basis totaled
$30,423,000 and $37,714,000 at December 31, 1998 and 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
December 31, 1998, 1997 and 1996, net earnings and basic earnings
per share for the years ended December 31, 1998, 1997 and 1996
would have been (lower) higher by $(777,000) and $(0.07),
$(3,705,000) and $(0.34), and $2,883,000 and $0.26, respectively.
<PAGE>
<PAGE>
NOTE 8--PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment, at cost, consist of the 
following:

<TABLE>
<CAPTION>
                                                      December 31,  
                                                 ---------------------
                                                    1998        1997
                                                 ---------   ---------
                                                    (In thousands)
<S>                                              <C>         <C>
Land and improvements.........................   $  28,321   $  29,354
Buildings and improvements....................      92,701      96,817
Machinery and equipment.......................     246,615     203,726
Pipelines.....................................      10,088       9,789
Furniture and fixtures........................      23,108      28,658
Vehicles......................................      10,160      10,620
Construction in progress......................      28,947      23,636
                                                 ---------   ---------
    Subtotal..................................     439,940     402,600
Accumulated depreciation and amortization.....    (138,008)   (120,773)
                                                 ---------   ---------
    Total.....................................   $ 301,932   $ 281,827
                                                 =========   =========
</TABLE>
<PAGE>
<PAGE>
NOTE 9--ACCRUED EXPENSES:

     Accrued expenses are comprised of the following:

<TABLE>
<CAPTION>
                                                            December 31,  
                                                         ----------------- 
                                                          1998       1997
                                                         -------   -------
                                                          (In thousands)
<S>                                                      <C>       <C>
Excise taxes.........................................    $12,264   $ 9,926
Bloomfield refinery acquisition contingent payment...      2,039     7,243
Payroll and related costs............................      6,082     5,240
Bonus, profit sharing and retirement plans...........      2,725     2,880
Interest.............................................      6,364     6,223
Other................................................      7,045     7,731
                                                         -------   -------
     Total                                               $36,519   $39,243
                                                         =======   =======
</TABLE>
<PAGE>
<PAGE>
NOTE 10--LONG-TERM DEBT:

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                               December 31,  
                                                          --------------------- 
                                                            1998        1997
                                                          --------    --------
                                                             (In thousands)
<S>                                                       <C>         <C>
9% senior subordinated notes, due 2007, 
  interest payable semi-annually........................  $150,000    $150,000
9 3/4% senior subordinated notes, due 
  2003, interest payable semi-annually..................   100,000     100,000
Secured credit agreement, due 2001, floating 
  interest rate, interest payable quarterly.............    24,000
Capital lease obligations, 11.3%, due through
  2007, interest payable monthly........................     8,235      22,904
Notes payable to others, collateralized by 
  real estate, 9 3/4%, due 1999, 
  interest payable monthly..............................       950       1,193
Other...................................................       499       2,022
                                                          --------    --------
    Subtotal............................................   283,684     276,119
Less current portion....................................    (1,200)       (562)
                                                          --------    --------
    Total...............................................  $282,484    $275,557
                                                          ========    ========
</TABLE>

     During August 1997, the Company issued the 9% Notes. The net
proceeds of the 9% Notes, after deducting expenses and initial
purchasers discounts, were approximately $146,800,000.
Approximately $73,600,000 of the proceeds were used to repay
outstanding indebtedness. The remaining proceeds of approximately
$73,200,000 were used for the purchase of service
station/convenience stores subject to capital lease obligations,
for the acquisition of the Kaibab and DeGuelle Assets, and for
general corporate purposes. Interest on the 9% Notes is payable
semi-annually on March 1 and September 1, commencing March 1,
1998.

     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 Indenture 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 Indentures supporting the Notes contain restrictive
covenants that, among other things, restrict the ability of the
Company and its subsidiaries to create liens, to incur or
guarantee debt, to pay dividends, to repurchase shares of the
Company's common stock, to sell certain assets or subsidiary
stock, to engage in certain mergers, to engage in certain
transactions with affiliates or to alter the Company's current
line of business. At December 31, 1998, the Company was in
compliance with the covenants relating to the 9% Notes, but was
not in compliance with the covenants relating to the 9 3/4%
Notes. At December 31, 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 $40,000,000
or the amount determined under a borrowing base calculation tied
to eligible accounts receivable and inventories as defined in the
Indenture. At December 31, 1998, this amount was approximately
$73,500,000. 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. 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 would 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 December 31, 1998, retained earnings available for dividends
under the most restrictive terms of the Indentures was
approximately $8,626,000.

     On December 23, 1998, the Company entered into a $65,000,000
secured Credit Agreement (the "Credit Agreement") due December
23, 2001, with Bank of America National Trust and Savings
Association, Union Bank of California, N.A. and Bank One,
Arizona, N.A. This Credit Agreement, a revolving loan agreement,
is primarily a working capital and letter of credit facility and
is secured by eligible accounts receivable and inventories as
defined in the Credit Agreement. In addition, the Company is able
to borrow up to $9,000,000 to exercise its purchase rights in
connection with the Thriftway Assets that are currently subject
to capital lease obligations, and up to $10,000,000 for other
acquisitions as defined in the Credit Agreement. The availability
of funds under this facility is the lesser of (i) $65,000,000, or
(ii) the amount determined under a borrowing base calculation
tied to the eligible accounts receivable and inventories. At
December 31, 1998, the availability of funds under the Credit
Agreement was approximately $49,000,000. There were $24,000,000
of direct borrowings outstanding under this facility at December
31, 1998, and there were approximately $12,800,000 of irrevocable
letters of credit outstanding, primarily to secure purchases of
raw materials. At March 1, 1999, no direct borrowings were
outstanding and approximately $12,800,000 of irrevocable letters
of credit were outstanding.

     The interest rate applicable to the Credit Agreement is tied
to various short-term indices. At December 31, 1998, this rate
was approximately 6.5% per annum. The Company is required to pay
a quarterly commitment fee ranging from 0.325% to 0.500% per
annum of the unused amount of the facility. The exact rate
depends on meeting certain conditions in the Credit Agreement.

     The Credit Agreement contains certain covenants and
restrictions which require the Company to, among other things,
maintain a minimum consolidated net worth, a minimum interest
coverage ratio, and a maximum capitalization ratio. It also
places limits on investments, dispositions of assets, prepayments
of senior subordinated debt, guarantees, liens and restricted
payments. At December 31, 1998, the Company was in compliance
with the Credit Agreement covenants and was not aware of any
noncompliance with the other terms of the Credit Agreement. The
Credit Agreement is guaranteed by all of the Company's direct and
indirect wholly-owned subsidiaries.

     In 1997, as part of the acquisition of the Thriftway Assets,
the Company leased sixty-four service stations/convenience stores
for a period of ten years with options to purchase the assets
during the ten year period for approximately $22,904,000. During
1998, the Company purchased fifty-four of these retail service
station/convenience stores for approximately $14,669,000. The
remaining ten stores continue to be leased under the original
terms and the Company intends to purchase them pursuant to
options to purchase during the remaining lease period for
approximately $8,235,000. The remaining lease obligations of
$8,235,000 are being accounted for as capital leases and require
annual lease payments of approximately $931,000, all of which are
recorded as interest expense. Assets associated with these lease
obligations of approximately $7,576,000 are included in property,
plant and equipment. Accumulated depreciation as of December 31,
1998 of $1,056,000 is related to these assets. Assets of
$659,000, primarily liquor licenses, are included in other
assets.

     Aggregate annual maturities of long-term debt as of December
31, 1998 are: 1999 - $1,200,000; 2000 - $24,116,000; 2001 -
$63,000; 2002 - $25,000; 2003 - $100,028,000; and all years
thereafter - $158,252,000.
<PAGE>
<PAGE>
NOTE 11--FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY:

     The following disclosure of the estimated fair value of
financial instruments is made in accordance with the requirements
of SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments" and SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments." 
The estimated fair value amounts have been determined by the
Company using available market information and valuation
methodologies described below. Considerable judgment is required,
however, in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not
be indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions
or valuation methodologies may have a material effect on the
estimated fair value amounts.

     The carrying amounts and estimated fair values of the
Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                 December 31,      
                                  ------------------------------------------
                                          1998                  1997
                                  --------------------  --------------------     
                                  Carrying  Estimated   Carrying  Estimated
                                   Amount   Fair Value   Amount   Fair Value
                                  --------  ----------  --------  ----------
                                                (In thousands)
<S>                               <C>        <C>        <C>       <C>
Balance Sheet--Financial 
  Instruments:
    Fixed rate long-term debt...  $251,449   $231,778   $253,180  $256,536
</TABLE>

     The carrying values of cash and cash equivalents,
receivables, accounts payable and accrued expenses approximate
fair values due to the short-term maturities of these
instruments. Variable rate long-term debt instruments are
estimated to approximate fair values as rates are tied to
short-term indices.

     The Company also has a long-term note receivable with a
related party which, due to its recent issuance, has a carrying
value that approximates fair value.

FIXED RATE LONG-TERM DEBT

     The fair value of fixed rate long-term debt was determined
using quoted market prices, where applicable, or estimated by
discounting future cash flows using rates estimated to be
currently available for debt of similar terms and remaining
maturities. 

HEDGING ACTIVITIES

    From time to time, the Company enters into futures and
options contracts to reduce price volatility, to fix margins in
its refining and marketing operations and to protect against
price declines for inventory volumes. These contracts permit
settlement by delivery of commodities and, therefore, are not
financial instruments as defined by SFAS No. 105. The Company
uses these contracts in its hedging activities. 

     At December 31, 1998, the Company's hedging activities
included open futures contracts maturing in 1999 covering 78,000
barrels of heating oil. In addition, the Company had outstanding
options covering 700,000 barrels of crude oil. These options
expired with a realized premium of $177,000 in January 1999. At
December 31, 1997, the Company's hedging activities included open
futures contracts maturing in 1998 covering 42,000 barrels of
crude oil and 36,000 barrels of heating oil. The futures and
options contracts generally qualify as hedges and any gains or
losses resulting from market changes are substantially offset by
losses or gains on the Company's hedging contracts. Gains and
losses on hedging contracts are deferred and reported as a
component of the related transaction. Gains and losses from
market changes on contracts not qualifying for hedge accounting
are recognized in operations. Net deferred losses for the
Company's petroleum hedging activities were approximately
$159,000 and $199,000 at December 31, 1998 and 1997,
respectively.

     The Company is exposed to loss in the event of
nonperformance by the other parties to these contracts. The
Company does not anticipate, however, nonperformance by the
counterparties. 
<PAGE>
<PAGE>
NOTE 12--INCOME TAXES:

     The provision (benefit) for income taxes is comprised of 
the following:

<TABLE>
<CAPTION>
                                          Year Ended December 31,
                                     -------------------------------
                                      1998        1997        1996
                                     -------     -------     -------
                                             (In thousands)
<S>                                  <C>         <C>         <C>
Current:  Federal.................   $ 1,406     $ 3,367     $ 3,712
          State...................         5         758         906
Deferred: Federal.................    (2,787)      4,689       5,471
          State...................      (133)        992       1,043
                                     -------     -------     -------
                                     $(1,509)    $ 9,806     $11,132
                                     =======     =======     =======
</TABLE>

     Income taxes paid in 1998, 1997 and 1996 were $1,468,000, 
$2,785,000 and $8,909,000, respectively. 

     A reconciliation of the difference between the provision
(benefit) for income taxes and income taxes at the statutory
U.S. federal income tax rate is as follows:

<TABLE>
<CAPTION>
                                          Year Ended December 31,
                                     -------------------------------
                                      1998        1997        1996
                                     -------     -------     -------
                                              (In thousands)
<S>                                  <C>         <C>         <C>
Income taxes at the statutory 
 U.S. federal income tax rate.....   $(1,304)    $ 8,785     $ 9,864
Increase (decrease) in taxes 
 resulting from:
   State taxes, net...............      (135)      1,191       1,346
   General business credits, net..      (182)       (100)
   Other, net.....................       112         (70)        (78)
                                     -------     -------     -------
                                     $(1,509)    $ 9,806     $11,132
                                     =======     =======     =======
</TABLE>





<PAGE>
<PAGE>
     Deferred income taxes are provided to reflect temporary
differences in the basis of net assets for income tax and
financial reporting purposes, as well as available tax credit
carryforwards. The tax effected temporary differences and credit
carryforwards which comprise deferred taxes are as follows:

<TABLE>
<CAPTION>
                                          December 31, 1998                December 31, 1997
                                    ------------------------------   -------------------------------  
                                     Assets  Liabilities   Total      Assets  Liabilities   Total
                                    -------  -----------  --------   -------  ------------  --------
                                            (In thousands)                   (In thousands)
<S>                                 <C>       <C>         <C>         <C>       <C>         <C>
Nondeductible accruals for
  uncollectible receivables.....    $   111               $    111    $   128               $    128
Insurance accruals..............        915                    915        555                    555
Insurance settlements...........        273                    273        189                    189
Other reserves..................        611                    611        546                    546
Inventory costs capitalized
  for income tax purposes.......        246                    246        198                    198
Nondeductible accrual for
  lower of cost or market
  adjustment to inventory.......      4,469                  4,469      1,184                  1,184
                                    -------   --------    --------    -------   --------    --------
    Total current...............      6,625                  6,625      2,800                  2,800
                                    -------   --------    --------    -------   --------    --------
Other nondeductible accruals....        382   $   (388)         (6)       428   $   (281)        147
Accelerated plant costs.........                  (944)       (944)               (1,348)     (1,348)
Operating lease.................                  (783)       (783)                 (863)       (863)
Accelerated depreciation........               (33,806)    (33,806)              (30,465)    (30,465)
Other...........................                (1,601)     (1,601)        14     (1,658)     (1,644)
Tax credit carryforwards........     10,347                 10,347      8,286                  8,286
                                    -------   --------    --------    -------   --------    --------
    Total noncurrent............     10,729    (37,522)    (26,793)     8,728    (34,615)    (25,887)
                                    -------   --------    --------    -------   --------    --------
    Total.......................    $17,354   $(37,522)   $(20,168)   $11,528   $(34,615)   $(23,087)
                                    =======   ========    ========    =======   ========    ========
</TABLE>

     At December 31, 1998, the Company had a minimum tax credit
carryforward of approximately $6,992,000 available to offset
future income taxes payable to the extent regular income taxes
payable exceeds alternative minimum taxes payable. Minimum tax
credits can be carried forward indefinitely. At December 31,
1998, the Company  also had approximately $56,000 in state net
operating loss carryforwards available. 

     At December 31, 1998, the Company had approximately
$3,299,000 of general business credits available to offset
future regular taxes payable. Pursuant to Federal income tax
law, these carryover credits must be used before any minimum tax
credit carryforward can be used. Of the total general business
credits available, $432,000 will expire in 2008, $1,344,000 will
expire in 2009, $1,154,000 will expire in 2010, $98,000 will
expire in 2011, $89,000 will expire in 2012 and $182,000 will
expire in 2013.

<PAGE>
<PAGE>
NOTE 13--EMPLOYEE STOCK OWNERSHIP PLAN:

     The Company and its subsidiaries have an Employee Stock
Ownership Plan ("ESOP") which is a noncontributory defined
contribution plan established primarily to acquire shares of the
Company's common stock for the benefit of all eligible
employees. At December 31, 1998 and 1997, the ESOP's assets
included 1,149,739 and 1,222,150 shares of the Company's common
stock, respectively. All of these shares have been allocated to
the participants. In addition to investments in the Company's
common stock, the ESOP is invested in a balanced mutual fund.
Contributions to the ESOP are made at the discretion of the
Company's Board of Directors. The Company made contributions of
$0, $536,000, and $450,000 to the ESOP for 1998, 1997 and 1996,
respectively. Allocations to participant accounts are made on a
formula based on the ratio that each participant's compensation,
during the Plan year, bears to the compensation of all such
participants. The Company treats all ESOP shares as outstanding
for earnings per share purposes.

     In the first quarter of 1999, the Company made
contributions totaling $3,000,000 to the ESOP for the fiscal
year ending December 31, 1999. These contributions were made to,
among other things, provide an incentive for employees to focus
on achieving the Company's strategic goals for 1999. Allocation
of this amount to participants' accounts will be made as of
December 31, 1999.




<PAGE>
<PAGE>
NOTE 14--401(k) PLAN:

     The Company has a 401(k) retirement plan for its employees.
During 1998, eligible employees could make contributions to the
plan, on a pretax basis, equal to a maximum of 12% of their
annual compensation. The Company will match the employee's
contributions at a rate of 50% up to a maximum of 6% of the
employee's annual compensation. For the years ended December 31,
1998, 1997, and 1996, the Company expensed $1,300,000, $930,000,
and $800,000, respectively, for matching contributions under
this plan. For 1999, the maximum contribution that eligible
employees can make to the plan was increased to 15% of their
annual compensation. The Company's matching contribution
remained unchanged.


<PAGE>
<PAGE>
NOTE 15--STOCK INCENTIVE PLANS:

     At a Special Meeting of Stockholders held on June 26, 1998,
the stockholders of the Company approved the Giant Industries,
Inc. 1998 Stock Incentive Plan (the "1998 Plan"). Under the 1998
Plan, shares of the Company's common stock are authorized to be
issued to deserving employees in the form of options,
appreciation rights, restricted shares, performance shares or
performance units, all as defined in the 1998 Plan. Appreciation
rights, performance shares and performance units may be settled
in cash, common shares of the Company or any combination
thereof.

     The total number of shares available for grant under the
1998 Plan during 1998 was 440,000 shares. Thereafter, commencing
January 1, 1999 and continuing through the term of the plan, 2%
of the total number of common shares outstanding as of the first
day of each calendar year are available for grant, subject to a
400,000 share annual limitation on the number of common shares
available for the grant of options that are intended to qualify
as "incentive stock options" under Section 422 of the Internal
Revenue Code. Common shares available for grant in any
particular calendar year which are not, in fact, granted in such
year cannot be added to the common shares available for grant in
any subsequent calendar year. Through December 31, 1998, no
grants had been made under the 1998 Plan.

     The 1998 Plan provides that all grants are subject to
restrictions, conditions and terms more specifically described
in the 1998 Plan, including, but not limited to, the exercise
price for stock options and appreciation rights and time vesting
requirements for all awards. In general, the 1998 Plan provides
that grants of stock options and appreciation rights must expire
no more than 10 years from the date of grant. In addition, all
grants under the 1998 Plan are subject to forfeiture under
certain circumstances, and all unvested awards may vest
immediately under various circumstances defined in the 1998
Plan.

     Under the Company's 1989 Stock Incentive Plan (the "1989
Plan"), 500,000 shares of the Company's common stock were
authorized to be issued to deserving employees in the form of
options and/or restricted stock. At December 31, 1998, there
were no shares available for future grants under the 1989 Plan.

     All of the options or restricted stock grants under the
1989 plan are subject to forfeiture under certain circumstances.
The options and restricted stock generally vest 14% to 33%
annually beginning one year after the date of grant. All options
were granted at or above fair market value at the date of grant
and expire on the tenth anniversary of the grant date. All
unvested awards under the 1989 Plan may vest immediately under
various circumstances defined in the 1989 Plan.


<PAGE>
<PAGE>
     The following summarizes stock option transactions under
the 1989 Plan:

<TABLE>
<CAPTION>
                                                        WEIGHTED
                                                        AVERAGE
                                                        EXERCISE
Options outstanding at                        SHARES     PRICE
----------------------                       --------   -------- 
<S>                                          <C>         <C>
January 1, 1996                              306,357     $8.14
  Exercised............................      (32,750)     6.61
  Forfeited............................       (6,600)     6.39
                                             -------
December 31, 1996......................      267,007      8.37
  Exercised............................      (11,000)     7.52
                                             -------
December 31, 1997......................      256,007      8.40
  Granted..............................      177,401      9.34
  Forfeited............................       (2,000)     5.25
                                             -------
December 31, 1998......................      431,408     $8.80
                                             =======
Options exercisable at December 31:
  1998.................................      254,007     $8.43
  1997.................................      256,007      8.40
  1996.................................      256,573      8.44
</TABLE>

     The following summarizes information about stock options
outstanding under the 1989 Plan at December 31, 1998:

<TABLE>
<CAPTION>
            OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
    -----------------------------------     ---------------------
                              WEIGHTED
    WEIGHTED                  AVERAGE                    WEIGHTED
    AVERAGE                  REMAINING                   AVERAGE
    EXERCISE     NUMBER     CONTRACTUAL        NUMBER    EXERCISE
     PRICE     OUTSTANDING     LIFE         EXERCISABLE   PRICE
    --------   -----------  -----------     -----------  --------
<S> <C>          <C>          <C>            <C>         <C>
    $ 8.96       108,857      0.5 Years      108,857     $ 8.96
     10.50         5,000      1.6 Years        5,000      10.50
     10.63        26,000      2.2 Years       26,000      10.63
      5.25        27,400      3.3 Years       27,400       5.25
      7.75        76,750      4.3 Years       76,750       7.75
      9.81        10,000      5.2 Years       10,000       9.81
      9.34       177,401      9.6 Years
                 -------                     -------
    $ 8.80       431,408      5.3 Years      254,007     $ 8.43
                 =======                     =======
</TABLE>

     In October 1995, the FASB issued SFAS No. 123 "Accounting
for Stock Based Compensation." The Company has determined that it
will not change to the fair value method prescribed in the
Statement and will continue to use Accounting Principles Board
Opinion No. 25 for measurement and recognition of employee stock
based compensation.

     The Company has adopted the disclosure-only provisions of
SFAS No. 123. If the Company had elected to recognize
compensation costs based on the fair value at the date of grant
for awards granted in 1998, consistent with the provisions of
SFAS No. 123, the Company's net loss and loss per share for the
year ended December 31, 1998, would have increased by less than
$33,000 and $0.005 per share.

     The pro forma effects of applying SFAS No. 123 in this
disclosure are not indicative of future amounts.

     The estimated weighted average fair values of options
granted during 1998 were $5.40 per share, and were estimated
using the Black-Scholes option-pricing model. The risk-free
interest rate applied for 1998 was 6%. The following assumptions
were used in the model: (i) expected dividend yield of 1.2%, (ii)
expected volatility rate of 38%, and (iii) expected lives ranging
from 4 years to 10 years.
<PAGE>
<PAGE>
NOTE 16 PHANTOM STOCK PLAN:

     On December 11, 1997, the Board of Directors of the Company
adopted the Giant Industries, Inc. 1998 Phantom Stock Plan (the
"Phantom Stock Plan") to become effective on January 30, 1998.
Under the Phantom Stock Plan, a total of 250,000 Phantom Stock
units were authorized for issuance to deserving employees. Each
Phantom Stock unit is equivalent to one share of the Company's
common stock.

     Upon exercise of each Phantom Stock unit, the recipient is
entitled to receive an amount equal in value to the sum of: (i)
the excess of the fair market value of one share of stock over
the exercise price per share specified in the Phantom Stock
award, and (ii) all dividends attributable to one share of stock
during the period from grant until exercise, which sum is
multiplied by the number of shares in respect to which the
Phantom Stock unit is being exercised. The amount received may be
paid in cash, common stock of the Company, or any combination
thereof.

     In 1998, a total of 100,000 Phantom Stock units were granted
to two employees of the Company. A grant of 25,000 units to each
individual was made at an exercise price of $12.00 per unit and a
separate grant of 25,000 units to each individual was made at
$18.50 per unit.

     At December 31, 1998, the ending stock price was lower than
the exercise price for all outstanding grants.

     At December 31, 1998, 30,000 Phantom Stock units had vested
and were exercisable. The remaining units vest in varying
amounts, and at various times, through December 31, 2001.

     All grants of Phantom Stock units expire on the tenth
anniversary of the date of grant and are subject to forfeiture
under certain circumstances. All unvested awards under the
Phantom Stock Plan may vest immediately under various
circumstances defined in the Phantom Stock Plan.
<PAGE>
<PAGE>
NOTE 17--INTEREST, OPERATING LEASES AND RENT EXPENSE:

     Interest paid and capitalized for 1998 was $25,358,000 and
$373,000, for 1997 was $13,075,000 and $333,000 and for 1996 was
$12,804,000 and $43,000, respectively.

     As discussed in Note 3, on December 31, 1998, the Company
and FFCA completed a sale-leaseback transaction. Under the terms
of the Agreement, FFCA purchased eighty-three service
station/convenience stores from the Company for approximately
$51,800,000. The Company in turn leased the eighty-three service
station/convenience stores back from FFCA under an operating
lease arrangement with an initial term of fifteen years and three
separate options to continue the lease for successive periods of
five years. Initial annual rental payments under the lease
agreement are approximately $5,100,000 and will be adjusted
upward by six percent on the second anniversary of the Agreement
and every second anniversary thereafter, on a compounded basis,
during the initial lease term and any extension thereof. The
Company has a right of first refusal to acquire the leased assets
upon an offer to purchase the assets by a third party. 

     The Company is committed to annual minimum rentals under
noncancelable operating leases that have initial or remaining
lease terms in excess of one year as of December 31, 1998 as
follows:

<TABLE>
<CAPTION>
                                        Land, building, machinery
                                          and equipment leases
                                        -------------------------
                                             (In thousands)
<S>                                             <C>
1999.................................           $  8,810
2000.................................              8,415
2001.................................              7,787
2002.................................              6,950
2003.................................              6,444
2004-2013............................             67,931
                                                --------
  Total minimum payments required....           $106,337
                                                ========
</TABLE>

     Total rent expense was $5,624,000, $3,354,000 and 
$1,930,000 for 1998, 1997 and 1996, respectively. 
<PAGE>
<PAGE>
NOTE 18--COMMITMENTS AND CONTINGENCIES:

     Various legal actions, claims, assessments and other
contingencies arising in the normal course of the Company's
business, including those matters described below, are pending
against the Company and certain of its subsidiaries. Certain of
these matters involve or may involve significant claims for
compensatory, punitive or other damages. These matters are
subject to many uncertainties, and it is possible that some of
these matters could be ultimately decided, resolved or settled
adversely. The Company has recorded accruals for losses related
to those matters that it considers to be probable and that can be
reasonably estimated. Although the ultimate amount of liability
at December 31, 1998, which may result from these matters is not
ascertainable, the Company believes that any amounts exceeding
the Company's recorded accruals should not materially affect the
Company's financial condition. It is possible that the ultimate
resolution of these matters could result in a material adverse
effect on the Company's results of operations for a particular
reporting period.

     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 all 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 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 Company, and several other entities, have received a
notice of intent to file suit from the New Mexico Office of the
Natural Resources Trustee (the "ONRT")  for the recovery of
$260,000,000 in alleged damages to natural resources, including
alleged damages to ground water, surface water and soil. The
notice relates to the South Valley Superfund site in Albuquerque,
New Mexico. The site allegedly includes contamination that
originated from a GE Aircraft Engines/U.S. Air Force facility, as
well as contamination that allegedly originated from a petroleum
products terminal that was acquired by the Company in 1995 (the
"Albuquerque Terminal"). Potentially responsible party liability
is joint and several, such that a responsible party may be liable
for all natural resources damages at a site even though it was
responsible for only a small part of such damages. At the time of
purchase by the Company, Texaco Refining and Marketing Inc.
("Texaco") agreed to defend, indemnify, reimburse and hold the
Company harmless from and against all claims and damages arising
from, or caused by, pre-closing contamination. Texaco has
acknowledged its obligation under this agreement, subject to any
evidence that the ONRT intends to assess damages for any releases
resulting from the Company's operations. The Company believes
that any natural resources damages associated with the South
Valley Superfund site relate to releases that predate the
Company's acquisition of the Albuquerque Terminal and,
accordingly, does not believe that it needs to record a liability
in connection with this matter.

     In May 1991, the Environmental Protection Agency ("EPA")
notified the Company 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"), adjacent to the Company's inactive Farmington
refinery. This refinery was operated until 1982. Although a final
plan of action for the Landfill has not yet been adopted by the
Bureau of Land Management (the "BLM"), the owner of the Landfill,
BLM developed a proposed plan of action in 1997, which it
projected would 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, BLM
is proposing to take additional remedial actions with an
estimated cost of approximately $1,800,000.
 
     In 1989, a consultant to the Company estimated, based on
various assumptions, that the Company's share of potential
liability could be approximately $1,200,000. This figure was
based upon estimated Landfill remediation costs significantly
higher than those being proposed by BLM. The figure was also
based on the consultant's evaluation of such factors as available
clean-up technology, BLM's involvement at the site and the number
of other entities that may have had involvement at the site, but
did not include an analysis of all of the Company's potential
legal defenses and arguments, including possible setoff rights. 

     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 the party was
responsible for only a small part of such costs. Although it is
possible that the Company may ultimately incur liability for
clean-up costs associated with the Landfill, a reasonable
estimate of the amount of this liability, if any, cannot be made
at this time because, among other reasons, the final site remedy
has not been selected, a number of entities had involvement at
the site, allocation of responsibility among potentially
responsible parties has not yet been made, and
potentially-applicable factual and legal issues have not been
resolved. Based on current information, the Company does not
believe that it needs to record a liability in relation to BLM's
proposed plan.

     The Company is undertaking an investigation into potential
lead contamination at a 5.5 acre site that the Company owns in
Bloomfield, New Mexico. The investigation arises out of the
removal of a 55,000 barrel crude oil storage tank by a
contractor. Although it is possible that the Company may
ultimately incur liability for lead clean-up costs, a reasonable
estimate of the amount of the Company's liability, if any, cannot
be made at this time because all potentially-applicable factual
and legal issues have not been resolved, including whether there
is lead at the site in amounts exceeding applicable remediation
levels and whether remediation costs, if any, can be recovered
from third parties.

     The Company has an environmental liability accrual of
approximately $2,700,000. Approximately $800,000 relates to
ongoing environmental projects, including the remediation of a
hydrocarbon plume that appears to extend no more than 1,800 feet
south of the inactive Farmington refinery and hydrocarbon
contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1,900,000 relates to an
originally estimated liability of approximately $2,300,000,
recorded in the second quarter of 1996, for certain environmental
obligations assumed in the acquisition of the Bloomfield
refinery. That amount was recorded as an adjustment to the
purchase price and allocated to the assets acquired. The
environmental accrual is recorded in the current and long-term
sections of the Company's Consolidated Balance Sheets.

     The Company is subject to audit on an ongoing basis of the
various taxes that it pays to federal, state, local and tribal
agencies. These audits may result in assessments or refunds along
with interest and penalties. In some cases the jurisdictional
basis of the taxing authority is in dispute and is the subject of
litigation or administrative appeals. The Company has received
several tax notifications and assessments from the Navajo Tribe
relating to Company operations 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 in connection with crude oil removed from
properties located within this area. The Company has invoked its
appeal rights with the Tribe's Tax Commission in connection with
this assessment and intends to oppose the assessment. In November
1998, the Company received a notice of proposed assessment from
the Navajo Tribe for an additional $2,100,000 involving severance
tax issues similar to those raised in connection with the
$1,800,000 assessment. The Company has responded to the notice of
proposed assessment and intends to oppose any final assessment
issued by the Navajo Tribe in connection with the area of
disputed jurisdiction. Although it is probable that the Company
will incur liability in connection with tax notifications and
assessments from the Navajo Tribe relating to the area of
disputed jurisdiction, it is not possible to reasonably estimate
the amount of any obligation for such taxes at this time because
the Navajo Tribe's authority to impose taxes throughout this area
has not been legally established and all potentially-applicable
factual issues have not been resolved. The Company has accrued a
liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the assessments.
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. The Company may
potentially be able to request reimbursement from third party oil
lease interest owners in connection with any severance tax
amounts ultimately paid by the Company that relate to purchases
from them. 


<PAGE>
<PAGE>
NOTE 19--QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1998
                                                                  -------------------------------------------
                                                                                    Quarter
                                                                  -------------------------------------------
                                                                  First(1)  Second(1)  Third(1)    Fourth(1)
                                                                  --------  ---------  --------    ----------
                                                                     (In thousands, except per share data)
<S>                                                               <C>       <C>        <C>         <C>
Continuing Operations:  
  Net revenues................................................    $145,716  $157,014   $167,461    $172,313
  Cost of products sold.......................................     105,752   112,748    119,139     127,966
                                                                  --------  --------   --------    --------
  Gross margin................................................      39,964    44,266     48,322      44,347
                                                                  --------  --------   --------    --------
  Operating expenses..........................................      24,893    24,261     26,424      26,960
  Depreciation and amortization...............................       6,789     6,774      7,664       7,939
  Selling, general and administrative expenses................       5,815     6,237      7,485(2)    5,751(2)
  Net earnings (loss).........................................      (1,682)      759        421      (1,715)
  Net earnings (loss) per common share - basic................    $  (0.15) $   0.07   $   0.04    $  (0.16)
  Net earnings (loss) per common share - assuming dilution....    $  (0.15) $   0.07   $   0.04    $  (0.16)
  Dividends declared per common share.........................    $   0.05  $   0.05   $   0.05
</TABLE>

<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1997
                                                                  ------------------------------------------
                                                                                    Quarter
                                                                  ------------------------------------------
                                                                   First   Second(1)   Third(1)    Fourth(1)
                                                                  -------  ---------   --------    ---------
                                                                    (In thousands, except per share data)
<S>                                                               <C>       <C>        <C>         <C>
Continuing Operations:  
  Net revenues................................................    $116,138  $154,123   $197,358    $189,659
  Cost of products sold.......................................      86,588   112,057    146,333     142,770
                                                                  --------  --------   --------    --------
  Gross margin................................................      29,550    42,066     51,025      46,889
                                                                  --------  --------   --------    --------
  Operating expenses..........................................      15,822    18,307     25,037      26,011
  Depreciation and amortization...............................       5,005     5,566      6,834       6,586
  Selling, general and administrative expenses................       4,448     5,360      3,474       5,974
  Net earnings................................................       1,124     5,675      6,596       1,899
  Net earnings per common share - basic.......................    $   0.10  $   0.51   $   0.60    $   0.17
  Net earnings per common share - assuming dilution...........    $   0.10  $   0.51   $   0.59    $   0.17
  Dividends declared per common share.........................    $   0.05  $   0.05   $   0.05    $   0.05
</TABLE>

(1) The results of operations of the Acquisitions are included 
    from the date of purchase. (See Note 3.)

(2) Selling, general and administrative expenses include costs
    associated with the terminated merger with Holly Corporation
    of approximately $1,053,000 and $302,000 in the third and
    fourth quarters of 1998, respectively. <PAGE>
<PAGE>
ITEM 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
         AND FINANCIAL DISCLOSURE.

     Not applicable.






<PAGE>
<PAGE>
                             PART III


     Certain information required by Part III is omitted from
this Report by virtue of the fact that the Registrant will file
with the Securities and Exchange Commission a definitive proxy
statement relating to the Company's Annual Meeting of
Stockholders to be held May 6, 1999 pursuant to Regulation 14A
(the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this Report, and certain information
to be included therein is incorporated herein by reference. The
Company expects to disseminate the Proxy Statement to
stockholders on or about March 29, 1999.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information concerning the Company's directors required
by this Item is incorporated by reference to the information
contained in the Proxy Statement under the caption "Election of
Directors".

     The information concerning the Company's executive officers
required by this Item is incorporated by reference to the section
in Part I hereof entitled "Executive Officers of the Registrant",
following Item 4.

     The information concerning compliance with Section 16(a) of
the Exchange Act required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance".

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Election of Directors", "Executive
Compensation", "Compensation Committee Report on Executive
Compensation" and "Compensation Committee Interlocks and Insider
Participation".

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

     The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Election of Directors", "Security Ownership
of Management" and "Shares Owned by Certain Shareholders".

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Compensation Committee Interlocks and Insider
Participation", "Certain Transactions" and "Indebtedness of
Management".
<PAGE>
<PAGE>
                               PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

      (a)(1)    The following financial statements are included
                in Item 8:

          (i)   Independent Auditors' Report

          (ii)  Consolidated Balance Sheets - December 31, 1998
                and 1997

          (iii) Consolidated Statements of Earnings (Loss) - Years
                ended December 31, 1998, 1997 and 1996

          (iv)  Consolidated Statements of Stockholders' Equity
                - Years ended December 31, 1998, 1997 and 1996

          (v)   Consolidated Statements of Cash Flows - Years
                ended December 31, 1998, 1997 and 1996

          (vi)  Notes to Consolidated Financial Statements

         (2)  Financial Statement Schedule. The following
financial statement schedule of Giant Industries, Inc. for the
years ended December 31, 1998, 1997 and 1996 is filed as part of
this Report and should be read in conjunction with the
Consolidated Financial Statements of Giant Industries, Inc.

          Independent Auditors' Report on Schedule  . . . . . S-1

          Schedule II - Valuation and Qualifying Accounts . . S-2

          Schedules not listed above have been omitted because
they are not applicable or are not required or because the
information required to be set forth therein is included in the
Consolidated Financial Statements or Notes thereto.

         (3)  Exhibits. The Exhibits listed on the accompanying
Index to Exhibits immediately following the financial statement
schedule are filed as part of, or incorporated by reference into,
this Report.

        Contracts with management and any compensatory plans or
arrangements relating to management are as follows:

Exhibit
   No.                   Description
-------                  -----------
10.6   Giant Industries, Inc., 1998 Phantom Stock Plan.
       Incorporated by reference to Exhibit 10.31 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended December 31, 1997, File No. 1-10398.

10.7   Giant Industries, Inc. 1998 Stock Incentive Plan.
       Incorporated by reference to Appendix H to the Joint Proxy
       Statement/Prospectus included in the Company's
       Registration Statement on Form S-4 under the Securities
       Act of 1933 as filed May 4, 1998, File No. 333-51785.

10.8   1989 Stock Incentive Plan of the Company.  Incorporated  
       by reference to Exhibit 10.1 to the Company's Annual Report 
       on Form 10-K for the fiscal year ended December 31, 1989, 
       File No. 1-10398.

10.9   Amendment No. 1 dated August 14, 1996, to 1989 Stock
       Incentive Plan. Incorporated by reference to Exhibit 10 to
       the Company's Report on Form 10-Q for the quarter ended
       September 30, 1996, File No. 1-10398.

10.10  Amended 1988 Restricted Stock Plan of Registrant.
       Incorporated by reference to Exhibit 10.3 to Form S-1.

10.11  1989 Stock Option Plan of the Company. Incorporated by
       reference to Exhibit 10.4 to Form S-1.

10.16  ESOP Substitute Excess Deferred Compensation Benefit
       Plan. Incorporated by reference to Exhibit 10.8 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended December 31, 1992, File No. 1-10398.

10.17  Giant Industries, Inc. and Affiliated Companies 401(k)
       Plan. Incorporated by reference to Exhibit 10.46 to
       Amendment No. 2 to the Form S-3 Registration Statement
       under the Securities Act of 1933 as filed November 12,
       1993, File No. 33-69252.

10.18  First Amendment of the Giant Industries, Inc. and 
       Affiliated Companies 401(k) Plan, dated October 17, 1996. 
       Incorporated by reference to Exhibit 10.30 to the
       Company's Annual Report on Form 10-K for the fiscal year
       ended December 31, 1996, File No. 1-10398.

10.19  Second Amendment to the Giant Industries, Inc. and
       Affiliated Companies 401(k) Plan, dated December 31, 1997.
       Incorporated by reference to Exhibit 10.30 to the
       Company's Report on Form 10-K for the fiscal year ended
       December 31, 1997, File No. 1-10398. 

10.20  Third Amendment to the Giant Industries, Inc. and
       Affiliated Companies 401(k) Plan effective July 1, 1998,
       dated December 10, 1998.

10.21  Fourth Amendment to the Giant Industries, Inc. and
       Affiliated Companies 401(k) Plan effective January 1,
       1999, dated December 10, 1998.

10.45  Employment Agreement, dated as of December 11, 1997,
       between James E. Acridge and the Company. Incorporated
       by reference to Exhibit 10.23 to the Company's Annual
       Report on Form 10-K for the fiscal year ended
       December 31, 1997, File No. 1-10398.

10.46  Employment Agreement, dated as of December 11, 1997,
       between Fredric L. Holliger and the Company. Incorporated
       By reference to Exhibit 10.24 to the Company's Report on
       Form 10-K for the fiscal year ended December 31, 1997,
       File No. 1-10398.

10.47  Employment Agreement, dated as of December 11, 1997,
       between Morgan Gust and the Company. Incorporated by
       reference to Exhibit 10.25 to the Company's Annual Report 
       on Form 10-K for the fiscal year ended December 31, 1997, 
       File No. 1-10398. 
_________________________________

     Form S-1--Refers to the Form S-1 Registration Statement
under the Securities Act of 1933 as filed October 16, 1989, File
No. 33-31584.

      (b) Reports on Form 8-K. No reports on Form 8-K were filed
by the Company during the fourth quarter of the fiscal year ended 
December 31, 1998.




<PAGE>
<PAGE>
                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                              GIANT INDUSTRIES, INC.


                              By:  /s/ James E. Acridge   
                                 ------------------------------
                                 James E. Acridge
                                 Chairman of the Board, President
                                 and Chief Executive Officer

March 30, 1999

     Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.


/s/  James E. Acridge          
---------------------------------------   
James E. Acridge, Chairman of the Board,
President, Chief Executive Officer
and Director

March 30, 1999


/s/  Fredric L. Holliger            
---------------------------------------       
Fredric L. Holliger, Executive Vice President, 
Chief Operating Officer and Director.

March 30, 1999


/s/  Mark B. Cox
---------------------------------------   
Mark B. Cox, Vice President, Treasurer,
Financial Officer and Assistant Secretary

March 30, 1999


/s/  Gary R. Dalke            
---------------------------------------       
Gary R. Dalke, Vice President,
Controller, Accounting Officer and
Assistant Secretary

March 30, 1999

<PAGE>
<PAGE>
/s/  Anthony J. Bernitsky        
---------------------------------------               
Anthony J. Bernitsky, Director

March 30, 1999


/s/  F. Michael Geddes         
---------------------------------------            
F. Michael Geddes, Director

March 30, 1999


/s/  Harry S. Howard, Jr.        
---------------------------------------          
Harry S. Howard, Jr., Director

March 30, 1999


/s/  Richard T. Kalen, Jr.               
---------------------------------------       
Richard T. Kalen, Jr., Director

March 30, 1999






<PAGE>
<PAGE>
                     INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Giant Industries, Inc.
Scottsdale, Arizona


We have audited the consolidated financial statements of Giant
Industries, Inc. and subsidiaries (the "Company") as of December
31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, and have issued our report thereon dated
March 4, 1999; such financial statements and report are included
elsewhere in this Form 10-K. Our audits also included the
consolidated financial statement schedule of the Company listed
in Item 14. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is
to express an opinion based on our audits. In our opinion, such
consolidated financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.




DELOITTE & TOUCHE LLP

Phoenix, Arizona
March 4, 1999


                              S-1




<PAGE>
<PAGE>
<TABLE>
                                                                                     SCHEDULE II
                                GIANT INDUSTRIES, INC. AND SUBSIDIARIES
                                   Valuation and Qualifying Accounts
                                  Three years ended December 31, 1998
                                            (In thousands)
<CAPTION>


                                                       Charged
                                      Balance at      (credited)                       Balance
                                      beginning        to costs                        at end
                                      of period      and expenses     Deduction(b)    of period
                                      ----------     ------------     ---------       ---------
<S>                                      <C>            <C>              <C>             <C>
Year ended December 31, 1998:
   Allowance for doubtful accounts....   $464           $227             $(231)          $460
                                         ====           ====             =====           ====

Year ended December 31, 1997:
   Allowance for doubtful accounts....   $254           $281             $ (71)          $464
                                         ====           ====             =====           ====

Year ended December 31, 1996:
   Allowance for doubtful accounts....   $424           $(30)(a)         $(140)          $254
                                         ====           ====             =====           ====


(a) Includes an adjustment of $100,000 in 1996 credited to costs and
    expenses to revise the Company's estimated Allowance for Doubtful Accounts.

(b) Deductions are specific trade accounts determined to be uncollectible. 


                                             S-2
</TABLE>




<PAGE>
<PAGE>
                       GIANT INDUSTRIES, INC.
                     ANNUAL REPORT ON FORM 10-K
                    YEAR ENDED DECEMBER 31, 1998

                          INDEX TO EXHIBITS
Definitions:

     Form S-1--Refers to the Form S-1 Registration Statement under
the Securities Act of 1933 as filed October 16, 1989, File No.
33-31584.

     Amendment No. 2--Refers to the Amendment No. 2 to Form S-1
Registration Statement under the Securities Act of 1933 as filed
November 20, 1989, File No. 33-31584.

     Amendment No. 3--Refers to the Amendment No. 3 to Form S-1
Registration Statement under the Securities Act of 1933 as filed
December 12, 1989, File No. 33-31584.

     Form S-3--Refers to the Form S-3 Registration Statement under
the Securities Act of 1933 as filed September 22, 1993, File No.
33-69252.

Exhibit No.                      Description
-----------                      -----------
 2.1      Definitive Agreement, dated April 18, 1997, by and between
          Giant Four Corners, Inc., as "Buyer", and Thriftway
          Marketing Corp. and Clayton Investment Company, collectively,
          as "Seller". Incorporated by reference to Exhibit 2.1 to the
          Company's Report on Form 8-K for the period May 28, 1997,
          File No. 1-10398.

 2.2      Stock Purchase Agreement, dated April 30, 1997, by
          and among Phoenix Fuel Co., Inc., (the "Company",
          J. W. Wilhoit, as Trustee of the Wilhoit Trust
          Agreement Dated 12/26/74, Katherine C. Lahowetz,
          as Trustee of the Theresa Ann Wilhoit Grantor
          Retained Annuity Trust Dated 4/4/97,  Katherine C.
          Lahowetz, and  Katherine C. Lahowetz, as Custodian
          for the Benefit of Emily Lahowetz, a minor
          (collectively, the "Shareholders") and Giant
          Industries Arizona, Inc., (the "Purchaser"). Incorporated
          by reference to Exhibit 2.1 to the Company's Report on
          Form 8-K for the period June 3, 1997, File No. 1-10398.

 3.1      Restated Certificate of Incorporation of Giant Industries,
          Inc., a Delaware corporation. Incorporated by reference to
          Exhibit 3.1 to Amendment No. 3. 

 3.2      Bylaws of Giant Industries, Inc., a Delaware corporation. 
          Incorporated by reference to Exhibit 3.2 to Amendment
          No. 3.

 3.3      Articles of Incorporation of Giant Exploration & Production
          Company, a Texas corporation ("Giant Exploration"), formerly
          Hixon Acquisition Corp. Incorporated by reference to Exhibit
          2.1, Annex III to Form S-1. 

 3.4      Bylaws of Giant Exploration.  Incorporated by reference to
          Exhibit 2.1, Annex IV to Form S-1. 

 3.5      Articles of Incorporation of Giant Industries Arizona, Inc.,
          an Arizona corporation ("Giant Arizona") formerly Giant
          Acquisition Corp. Incorporated by reference to Exhibit 2.1,
          Annex V to Form S-1. 

 3.6      Bylaws of Giant Arizona.  Incorporated by reference to
          Exhibit 2.1, Annex VI to Form S-1. 

 3.7      Articles of Incorporation of Ciniza Production Company. 
          Incorporated by reference to Exhibit 3.7 to Form S-3.

 3.8      Bylaws of Ciniza Production Company.  Incorporated by
          reference to Exhibit 3.8 to Form S-3.

 3.9      Articles of Incorporation of Giant Stop-N-Go of New Mexico,
          Inc.  Incorporated by reference to Exhibit 3.9 to Form S-3.

 3.10     Bylaws of Giant Stop-N-Go of New Mexico, Inc. Incorporated
          by reference to Exhibit 3.10 to Form S-3.

 3.11     Articles of Incorporation of Giant Four Corners, Inc.  
          Incorporated by reference to Exhibit 3.11 to Form S-3.

 3.12     Bylaws of Giant Four Corners, Inc.   Incorporated by
          reference to Exhibit 3.12 to Form S-3.

 3.13     Articles of Incorporation of Giant Mid-Continent, Inc.
          Incorporated by reference to Exhibit 3.13 to the Company's
          Annual Report on Form 10-K for fiscal year ended December 31,
          1994, File No. 1-10398.

 3.14     Bylaws of Giant Mid-Continent, Inc.  Incorporated by 
          reference to Exhibit 3.14 to the Company's Annual Report on 
          Form 10-K for fiscal year ended December 31, 1994, File No. 
          1-10398.

 3.15     Articles of Incorporation of San Juan Refining Company.
          Incorporated by reference to Exhibit 3.15 to the Company's
          Annual Report on Form 10-K for fiscal year ended December 31,
          1995, File No. 1-10398.

 3.16     Bylaws of San Juan Refining Company. Incorporated by 
          reference to Exhibit 3.16 to the Company's Annual Report on 
          Form 10-K for fiscal year ended December 31, 1995, 
          File No. 1-10398.

 3.17     Articles of Incorporation of Phoenix Fuel Co., Inc.
          Incorporated by reference to Exhibit 3.17 to the
          Company's Annual Report on Form 10-K for fiscal year ended
          December 31, 1997, File No. 1-10398.

 3.18     Amended Bylaws of Phoenix Fuel Co., Inc.
          Incorporated by reference to Exhibit 3.18 to the
          Company's Annual Report on Form 10-K for fiscal year ended
          December 31, 1997, File No. 1-10398.

 3.19**   Articles of Incorporation of DeGuelle Oil Company.

 3.20**   Bylaws of DeGuelle Oil Company.

 4.1      Indenture, dated as of November 29, 1993 among the Company,
          as Issuer, the  Subsidiary Guarantors, as guarantors, and
          NBD Bank, National Association, as Trustee, relating to 
          $100,000,000 of 9 3/4% Senior Subordinated Notes due 2003.  
          Incorporated by reference to Exhibit 4.1 to the Company's 
          Current Report on Form 8-K dated November 29, 1993, File 
          No. 1-10398.

 4.2      Indenture, dated as of August 26, 1997, among the Company,
          as Issuer, the Subsidiary Guarantors, as guarantors, and
          The Bank of New York, as Trustee, relating to $150,000,000
          of 9% Senior Subordinated Notes due 2007. Incorporated by
          reference to Exhibit 4.8 to the Company's Registration
          Statement on Form S-4 under the Securities Act of 1933 as
          filed October 9, 1997, File No. 333-37561.

10.1**    Credit Agreement, dated December 23, 1998, among Giant
          Industries, Inc., the Financial Institutions parties 
          hereto and Bank of America National Trust and Savings
          Association, as Administrative Agent and as Letter of
          Credit Issuing Bank.

10.2      Credit Agreement, dated October 4, 1995, among Giant
          Industries, Inc., as Borrower, Giant Industries Arizona,
          Inc., Ciniza Production Company, San Juan Refining Company,
          Giant Exploration & Production Company and Giant Four
          Corners, Inc., as Guarantors and Bank of America National
          Trust and Savings Association, as Agent, Bank of America
          Illinois, as a Bank and as Letter of Credit Issuing Bank
          and the Other Financial Institutions Parties hereto.
          Incorporated by reference to Exhibit 4.1 to the Company's
          Report on Form 8-K for the period October 4, 1995,
          File No. 1-10398.

10.3      First Amendment, dated May 15, 1996, to Credit Agreement, 
          dated October 4, 1995, among Giant Industries, Inc., as 
          Borrower, Giant Industries Arizona, Inc., Giant Exploration 
          & Production Company, Giant Four Corners, Inc., San Juan
          Refining Company  and Ciniza Production Company, as 
          Guarantors, and Bank of America National Trust and Savings 
          Association, as Agent, Bank of America Illinois, as issuing 
          Bank and as a Bank, NBD Bank as a Bank, and  Union Bank, as a 
          Bank. Incorporated by reference to Exhibit 4.2 to the Company's 
          Report on Form 8-K for the period May 28, 1997, File No. 1-10398.
   
 10.4     Second Amendment, dated May 23, 1997, to Credit Agreement, 
          dated October 4, 1995, among Giant Industries, Inc., as 
          Borrower, Giant Industries Arizona, Inc., Giant Exploration 
          & Production Company,  San Juan Refining Company, Giant Four
          Corners, Inc. and Ciniza Production Company, as Guarantors, 
          and Bank of America National Trust and Savings Association, 
          as Agent, Bank of America Illinois, as issuing Bank and as a 
          Bank, First National Bank of Chicago (successor to NBD Bank,
          by assignment), as a Bank, and Union Bank of California, N.A. 
          (formerly known as Union Bank), as a Bank. Incorporated by 
          reference to Exhibit 4.3 to the Company's Report on Form 8-K 
          for the period May 28, 1997, File No. 1-10398.

 10.5     Third Amendment, dated as of August 25, 1997, to Credit
          Agreement, dated October 4, 1995, among Giant Industries, 
          Inc., as Borrower, Giant Industries Arizona, Inc., Giant
          Exploration & Production Company, San Juan Refining 
          Company, Giant Four Corners, Inc., Ciniza Production
          Company and Phoenix Fuel Co., Inc., as Guarantors, and
          Bank of America National Trust and Savings Association, as
          Agent, Bank of America National Trust and Savings
          Association (successor to Bank of America Illinois, as
          Issuing Bank and as a Bank, The First National Bank of
          Chicago (successor to NBD Bank, by assignment), as a
          Bank and Union Bank of California, N.A. (formerly known
          as Union Bank), as a Bank. Incorporated by reference to
          Exhibit 10.1 to the Company's Report on Form 10-Q for the
          quarter ended March 31, 1998, File No. 1-10398.

 10.6     Giant Industries, Inc., 1998 Phantom Stock Plan. Incorporated
          By reference to Exhibit 10.31 to the Company's Annual Report 
          on Form 10-K for the fiscal year ended December 31, 1997, 
          File No. 1-10398.

 10.7     Giant Industries, Inc. 1998 Stock Incentive Plan.
          Incorporated by reference to Appendix H to the Joint Proxy
          Statement/Prospectus included in the Company's Registration
          Statement on Form S-4 under the Securities Act of 1933 as
          filed May 4, 1998, File No. 333-51785.

 10.8     1989 Stock Incentive Plan of the Company.  Incorporated by
          reference to Exhibit 10.1 to the Company's Annual Report on
          Form 10-K for the fiscal year ended December 31, 1989,
          File No. 1-10398.

 10.9     Amendment No. 1 dated August 14, 1996, to 1989 Stock
          Incentive Plan.  Incorporated by reference to Exhibit 10 to
          the Company's Report on Form 10-Q for the quarter ended
          September 30, 1996, File No. 1-10398.                    

 10.10    Amended 1988 Restricted Stock Plan of the Company. 
          Incorporated by reference to Exhibit 10.3 Form S-1. 

 10.11    1989 Stock Option Plan of the Company.  Incorporated by
          reference to Exhibit 10.4 to Form S-1. 

 10.12    Employee Stock Ownership Plan and Trust Agreement of the
          Company, as amended.  Incorporated by reference to Exhibit
          10.1 of the Company's Report on Form 10-Q for the quarter
          ended September 30, 1994, File No. 1-10398. 

 10.13    Ninth Amendment of the Employee Stock Ownership Plan and
          Trust Agreement of Giant Industries, Inc. And Affiliated
          Companies dated October 1, 1996. Incorporated by reference
          to Exhibit 10.4 to the Company's Annual Report on Form
          10-K for the fiscal year ended December 31, 1996, File
          No. 1-10398.

 10.14    Tenth Amendment of the Employee Stock Ownership Plan and
          Trust Agreement of Giant Industries, Inc. and Affiliated
          Companies dated December 15, 1997. Incorporated by
          reference to Exhibit 10.5 to the Company's Annual Report on 
          Form 10-K for the fiscal year ended December 31, 1997, File 
          No. 1-10398.

 10.15**  Eleventh Amendment of the Employee Stock Ownership Plan
          and Trust Agreement of Giant Industries, Inc. and 
          Affiliated Companies dated March 24, 1998.

 10.16    ESOP Substitute Excess Deferred Compensation Benefit Plan. 
          Incorporated by reference to Exhibit 10.8 to the Company's
          Annual Report on Form 10-K for the fiscal year ended
          December 31, 1992, File 1-10398. 

 10.17    Giant Industries, Inc. and Affiliated Companies 401(k) Plan. 
          Incorporated by reference to Exhibit 10.46 to Amendment No.
          2 to the Form S-3 Registration Statement under the Securities 
          Act of 1933 as filed November 12, 1993, File No. 33-69252.

 10.18    First Amendment of the Giant Industries, Inc. and Affiliated
          Companies 401(k) Plan, dated October 17, 1996. Incorporated 
          by reference to Exhibit 10.30 to the Company's Annual Report
          on Form 10-K for the fiscal year ended December 31, 1996,
          File No. 1-10398.

 10.19    Second Amendment to the Giant Industries, Inc. and Affiliated
          Companies 401(k) Plan, dated December 31, 1997. Incorporated 
          by reference to Exhibit 10.30 to the Company's Report on Form 
          10-K for the fiscal year ended December 31, 1997, File No. 
          1-10398.

 10.20**  Third Amendment to the Giant Industries, Inc. and Affiliated
          Companies 401(k) Plan effective July 1, 1998, dated 
          December 10, 1998.

 10.21**  Fourth Amendment to the Giant Industries, Inc. and Affiliated
          Companies 401(k) Plan effective January 1, 1999, dated 
          December 10, 1998.

 10.22    Purchase Agreement, dated November 29, 1990, between Giant
          Arizona and Prime Pinnacle Peak Properties Limited
          Partnership.  Incorporated by reference to Exhibit 10.16 of
          the Company's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1990, File No. 1-10398.             

 10.23    Escrow Instructions, dated January 7, 1991, between Prime
          Pinnacle Peak Properties Limited Partnership and Giant
          Arizona.  Incorporated by reference to Exhibit 10.17 of the
          Company's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1990, File No. 1-10398.             

 10.24**  Real Estate Purchase Agreement dated October 5, 1997 between
          Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") and Giant
          Industries Arizona, Inc. ("Purchaser").

 10.25**  Amendment to Real Estate Purchase Agreement dated October 5,
          1997 between Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") 
          and Giant Industries Arizona, Inc. ("Purchaser") dated October 16,
          1997.

 10.26**  Second Amendment to Real Estate Purchase Agreement dated October 5,
          1997 between Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") 
          and Giant Industries Arizona, Inc. ("Purchaser") dated April 21,
          1998.

 10.27    Agreement for Leasing of Service Station Site, dated
          March 1, 1991, between Giant Arizona and Prime Pinnacle Peak
          Properties Limited Partnership.  Incorporated by reference
          to Exhibit 10.18 of the Company's Annual Report on Form 10-K
          for the fiscal year ended December 31, 1990, File
          No. 1-10398.                            

 10.28    First Amendment to Agreement for Leasing of Service Station
          Site, dated March 1, 1991, between Giant Arizona and Prime
          Pinnacle Peak Properties Limited Partnership.  Incorporated
          by reference to Exhibit 10.18 to the Company's Annual Report
          on Form 10-K for the fiscal year ended December 31, 1992,
          File 1-10398.   

 10.29**  Retail Lease dated July 1, 1998, between Pinnacle Citadel
          LLC ("Landlord") and Giant Industries Arizona, Inc. ("Tenant").

 10.30**  Retail Lease dated July 1, 1998, between Pinnacle Citadel
          LLC ("Landlord") and Giant Industries Arizona, Inc. ("Tenant").

 10.31**  Retail Sublease dated July 1, 1998 between Giant Industries
          Arizona, Inc. ("Lessor") and Pinnacle Inn at the Citadel LLC
          ("Tenant").

 10.32**  Sale and Lease Agreement dated December 31, 1998, by and
          among FFCA Capital Holding Corporation ("Buyer") and Giant
          Industries Arizona, Inc. and Giant Four Corners, Inc.
          (individually called "Seller" and collectively called "Sellers").

 10.33    Aircraft Lease Purchase Agreement, dated as of June 21,
          1991, between Metlife Capital Corporation and the Company. 
          Incorporated by reference to Exhibit 10.1 to the Company's
          Report on Form 10-Q for the quarter ended June 30, 1991,
          File No. 1-10398.

 10.34**  Agreement dated September 17, 1998 between James E.
          Acridge ("Borrower") and Giant Industries, Inc. ("Lender").

 10.35**  Promissory Note for $4,000,000 dated September 17, 1998,
          from James E. Acridge to Giant Industries, Inc.

 10.36**  Modification Agreement to Promissory Note for $4,000,000,
          dated September 17, 1998, from James E. Acridge to Giant
          Industries, Inc., dated December 23, 1998.       

 10.37**  Amended and Restated Promissory Note for $5,000,000
          dated December 23, 1998, from James E. Acridge to
          Giant Industries, Inc.

 10.38    Promissory Note for $600,000, dated December 1, 1988, from
          JEA to Metlife Capital Corporation ("Metlife"). 
          Incorporated by reference to Exhibit 10.38 to Form S-1.   

 10.39    Promissory Note for $825,000, dated December 20, 1988, from
          JEA to Metlife.  Incorporated by reference to Exhibit 10.39
          to Form S-1.                            

 10.40    Promissory Note for $750,000, dated December 28, 1987, from
          JEA to Metlife.  Incorporated by reference to Exhibit 10.40
          to Form S-1. 

 10.41    Promissory Note for $1,087,500, dated December 30, 1988,
          from JEA to Metlife.  Incorporated by reference to Exhibit
          10.44 to Form S-1. 

 10.42*   Natural Gas Liquids Sales and Purchase Agreement, dated
          October 27, 1994, between Meridian Oil Hydrocarbons Inc.
          and Giant Refining Company, a division of Giant Industries
          Arizona, Inc.  Incorporated by reference to Exhibit 10.28 to 
          the Company's Annual Report on Form 10-K for fiscal year ended 
          December 31, 1994, File No. 1-10398.

 10.43    Registration Rights Agreement, dated as of August 21, 1997,
          among the Company, the Initial Purchasers and the Subsidiary
          Guarantors. Incorporated by reference to Exhibit 10.31 to the 
          Company's Registration Statement on Form S-4 under the 
          Securities Act of 1933 as filed October 9, 1997, File No. 
          333-37561.

 10.44    Purchase Agreement, dated August 21, 1997, among the Company,
          the Initial Purchasers and the Subsidiary Guarantors.
          Incorporated by reference to Exhibit 10.32 to the Company's
          Registration Statement on Form S-4 under the Securities Act
          of 1933 as filed October 9, 1997, File No. 333-37561.

 10.45    Employment Agreement, dated as of December 11, 1997, between
          James E. Acridge and the Company. Incorporated by reference
          to Exhibit 10.23 to the Company's Annual Report on Form 10-K 
          for the fiscal year ended December 31, 1997, File No. 1-10398. 

 10.46    Employment Agreement, dated as of December 11, 1997, between
          Fredric L. Holliger and the Company. Incorporated by reference
          to Exhibit 10.24 to the Company's Annual Report on Form 10-K 
          for the fiscal year ended December 31, 1997, File No. 1-10398. 

 10.47    Employment Agreement, dated as of December 11, 1997, between
          Morgan Gust and the Company. Incorporated by reference to
          Exhibit 10.25 to the Company's Annual Report on Form 10-K for 
          the fiscal year ended December 31, 1997, File No. 1-10398.

 10.48    Consulting Agreement, dated January 1, 1990, between the
          Company and Kalen and Associates.  Incorporated by reference
          to Exhibit 10.66 of the Company's Annual Report on Form 10-K
          for the fiscal year ended December 31, 1990, File
          No. 1-10398.                            

 10.49    Consulting Agreement, dated March 12, 1992, between the
          Company and Geddes and Company.  Incorporated by reference
          to Exhibit 10.1 to the Company's Report on Form 10-Q for the
          quarter ended June 30, 1992, File No. 1-10398.         

 18.1     Letter regarding change in accounting principles. 
          Incorporated by reference to Exhibit 18.1 of the Company's
          Annual Report on Form 10-K for the fiscal year ended
          December 31, 1990, File No. 1-10398.    

 21.1 **  Subsidiaries of the Company.            

 23.1 **  Consent of Deloitte & Touche LLP to incorporate reports in
          previously filed Registration Statement. 

 27.1 **  Financial Data Schedule for fiscal year ended December 31, 1998.

 99.1 **  Information required by Rule 15d-21 under the Securities Act
          of 1934 for the year ended December 31, 1998 for the Giant
          Industries, Inc. and Affiliated Companies Employee Stock
          Ownership Plan.

  *Certain information contained in these documents has been afforded
   confidential treatment.
 **Filed herewith.