Fry bacon until crisp. Remove the bacon with a slotted spoon and set aside.
Add onion to bacon fat in pan and cook 5 minutes until onion is soft. With a slotted spoon, add onion to bacon.
Pour bacon fat into a measuring cup and add vegetable oil to equal 1/2 cup.
Add bacon fat to cornstarch mixture and reserve.
Combine vinegar, water, sugar, salt and pepper in a small saucepan and heat to a boil. Add cornstarch mixture and cook until thickened (1-2 minutes).
Remove from heat and add bacon and onion. Use while warm.