Nov. 21--Oil-refinery workers on the Delaware River yesterday received their second big blow in six weeks, when Valero Energy Corp. said it would close its operation in Delaware City, Del., casting 550 out of work.

When workers heard the news, "it was like a time bomb went off," said Matt Edler, who has worked for 10 years at the refinery that rises out of the lowlands near the Delaware River in southern New Castle County.

"My grandfather worked there, my father, and I worked there," said Edler, who yesterday afternoon joined other shocked refinery workers at Red Lion Inn in Bear, Del. "We were all doing the best we could to keep the place alive. That's our life."

The loss of Valero as a provider of high-wage industrial jobs adds to the economic woes in Delaware caused by the recent loss of 2,000 auto-industry jobs at General Motors and Chrysler plants.

Coupled with Sunoco Inc.'s idling of its Eagle Point refinery in West Deptford, Valero's decision shows the refining industry is under intense pressure, not just from the worst economic downturn since the 1930s, but also from expectations that U.S. gasoline demand will never return to the highs of 2007.

The Delaware City refinery, which Valero bought in 2005, when the industry's biggest problem was lack of capacity to keep up with soaring demand, was losing an unsustainable $1 million a day this year, the company said.

"The decision to permanently close the Delaware City refinery was a very difficult one," Valero chairman and chief executive Bill Klesse said in a statement. "We spent the last year diligently trying to avoid this situation."

In September, San Antonio-based Valero closed a portion of the Delaware refinery, which can process 182,200 barrels of crude oil a day into gasoline, diesel, and other fuels, and laid off 150 employees and 100 contract workers, hoping to make the plant more profitable. It did not do enough.

Like all refiners, Valero, the nation's largest refiner, is facing pressure from more efficient cars, inroads by renewable fuels, and the aging of the population in industrialized countries.

Those factors, along with last year's experience of paying $4 a gallon for gasoline, appear to have changed the upward trajectory of demand growth for gasoline and other petroleum-based fuels.

Paul Cheng, a refining analyst at Barclays Capital, expects more shutdowns. "We believe nearly 2 million [barrels a day] of global refining capacity could be permanently closed between now and 2011," he said in a research note for clients.