Felix's Chili con Queso

Source: Felix Mexican Restaurant, Houston, Texas

1/2 cup vegetable oil
1 onion, chopped
Salt and ground black pepper to taste
1/2 cup canned tomatoes
1/4 teaspoon cayenne pepper
1 1/2 teaspoons granulated sugar
2 tablespoons paprika
Garlic powder to taste
1/4 cup flour
1/4 cup water
1/2 pound American cheese, grated (2 cups)

Combine oil, onion, salt, pepper, tomatoes, cayenne, sugar, paprika and garlic powder in heavy pot and simmer 25 to 30 minutes over medium heat.

Mix flour and water in small bowl; add to onion mixture gradually, stirring until smooth and thick. Add cheese, stirring constantly to prevent sticking. Cook until well-blended and smooth.

Serve warm with tortilla chips.