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.

The surfacing of the fiery sermons of Obama's former pastor, the Rev. Jeremiah Wright, was followed by several stumbles. Obama's remark to a fundraiser that "bitter" small-town voters cling to guns and religion was one self-inflicted wound. McCain and Clinton seized on it to paint Obama as an elitist.

RENEWED VIGOR

His losses in the Rust Belt states of Ohio and Pennsylvania led to questions about his electability because of his weak showing with white working class voters, traditionally a core Democratic constituency.

Obama did little to help himself with a lackluster debate performance in Philadelphia where he was put on the defensive about Wright, his patriotism and why he chose not to wear a flag pin on his lapel.

He later expressed annoyance with the moderator's superficial questions and caught flak from reporters for his reluctance to take questions over the following couple of days.

In the run-up to the April 22 Pennsylvania vote, Obama often seemed tired and talked of missing his two daughters who were at home in Chicago as he was having mixed success wooing blue-collar voters in pubs, bowling allies and diners.

The low point for Obama came when Wright stepped back into the spotlight and unapologetically repeated his charges that the U.S. government bore some blame for the Sept. 11 attacks and the spread of AIDS to blacks.