Make the sauce: In a wide, heavy bottomed pot, heat the olive oil over medium-high heat. Place the sliced onion into the pot and saute for 4 minutes. Lower the heat to medium-low, cover and allow to soften for 15 minutes. Stir the onions every 5 minutes or so. Pour the crushed tomatoes, ¾ cup water, tomato paste, 1 teaspoon salt, ½ teaspoon white pepper, the cane sugar and bay leaves into the pot and stir. Reduce the heat to low and simmer for 30 minutes, adding up to 1 cup of water to achieve the desired consistency.