UPDATE 1-How Obama got his momentum back

(Adds gas tax issue, edits)

By Caren Bohan

RALEIGH, N.C., May 7 (Reuters) - Down on his luck two weeks ago, an annoyed Barack Obama complained, "Why can't I eat my waffle?" when a reporter tossed him a question over breakfast at a Pennsylvania diner on the eve of the state's primary.

On Tuesday morning, when the front-runner for the Democratic presidential nomination sat down to an omelet in a diner in Greenwood, Indiana, he seemed elated. Voters were streaming to the polls in Indiana and North Carolina as Obama chatted about his hopes and expectations and joked about his weight.

The drawn-out struggle between the Illinois senator and his rival Hillary Clinton has had many ups and downs. But on Tuesday Obama won a compelling victory in North Carolina's primary while Clinton eked out a narrow win in Indiana.

Obama's aides declared his momentum was back and it was only a matter of time before the New York senator would be forced to exit the race for the party's nomination.

"We're nearing the finish line," said Obama's top strategist, David Axelrod. "We have a lot to celebrate tonight and I think the Clinton folks have a lot to think about."

But if Obama is poised to wrap up the race soon, putting him closer to becoming the country's first black president, it will be in spite of a series of setbacks he suffered over the past several weeks.

In February, as he coasted to one victory after another, the confident and rhetorically gifted Obama was beginning to seem virtually certain to get his party's nod to face Republican presidential nominee Sen. John McCain in the November election.