Spaghetti Sauce

1 cup chopped onion
3 cloves chopped garlic
3 Tbsp olive oil
3 1/2 cups Italian plum tomatoes
2 small cans tomato paste
2 cups water
1 bay leaf
1/2 tsp salt
1/4 tsp pepper
1/2 tsp oregano

Saute onion and garlic in oil. Add tomatoes, paste, water, bay leaf, salt and pepper. Simmer uncovered 2 hours. Add oregano and continue cooking for 15 minutes. Remove bay leaf.