In a fairly large stock pot, add olive oil, butter/margarine, onions and chopped garlic. Saute on med/low only for a short time..just sweat the onion and garlic, then remove from heat.
In either a blender or a food processor add one can of the drained whole tomatoes and half of the paste. then add half of the sugar, salt, peppper, thyme, oregano and basil. Then spoon half of one of the remaining whole peeled tomatoes, drained. Blend until smooth and pour into pot with onion and garlic.
Repeat this process with remaining half of ingredients, except diced tomatoes.
Turn heat back on to med/low and stir until oil mixes with tomatoes, then add diced tomatoes and stir once again. Cover and cook for 45 minutes stirring often. Once 45 minutes is up, turn off heat, remove lid, stir and let stand for 10 minutes. At this point you could add other ingredients such as crushed red pepper, grated romano cheese or fresh basil if desired.