In large stockpot, heat olive oil. When hot, add onions, carrots, and celery. Sauté on medium heat for 10 minutes, stirring occasionally until lightly browned. Push vegetables to the side and add garlic. Season vegetables with some of the salt and pepper and cook for another 2 minutes.
Add bay leaves, oregano, water, sugar, tomatoes, and tomato paste to stockpot. Mix well and bring to boil. Season with rest of the salt and pepper. Reduce heat to low or medium-low and let cook for 45 minutes. Adjust seasonings. Sauce improves if made day before.