[chef] Ruby search path?

[ItsMikeE < >]

When I start up the chef server I get the following error message

"/opt/chef/local/lib/ruby/site_ruby/1.8/gems/gems/chef-server-api-0.10.0/config/init.rb:20:in
`require': no such file to load -- merb-assets (LoadError)"

I can change directory to the directory containing merb-assets
(/opt/chef/local/lib/ruby/site_ruby/1.8/gems/gems/merb-assets-1.1.3/lib/) and
then start the server.

There are other similar errors for other binaries

Is there some kind of search path I can set?
I already have GEM_HOME set to /opt/chef/local/lib/ruby/site_ruby/1.8/gems