The fire started at Sutton Courtenay Tyres at 0700 GMT and people reported hearing explosions.
Some 100 homes nearby, at the junction of Milton Road, Harwell Road and the High Street, were evacuated and a 200m exclusion zone was set up.
Engineers had isolated the power supply to some houses outside the zone during the blaze when a live cable fell down.
People within the exclusion zone have been taken to hotels and will not be able to return to their homes until Thursday evening.
The fire service and police are investigating the cause of the fire. No-one was injured.
Eight fire engines and 90 firefighters battled the flames, which were described by eyewitnesses as 40ft (12m) or 50ft (15m) high.
John Kelly, the council's emergency planning officer, had warned that some residents may have to stay away from their homes for 24 hours while the other acetylene gas cylinders are being cooled down.
The nearby village hall was opened as a rest centre for residents who had been forced to leave their homes. They were later moved to the Kassam Stadium complex.
Earlier, the fire service said the acetylene cylinders were still "like bombs".
Motorists are advised to avoid the area as some roads in the village have been closed.
Southern Electric said about 35 properties were without electricity, but power has since been restored.
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