rake task can't find installed gems

I'm running a rake task and it complains there are "Missing gems" even
though they are indeed installed. However from further inspection, it
appears it is not looking in my GEM PATH (/usr/local/lib/ruby/1.8) but
instead is looking in

/usr/lib/ruby/gems/1.8.

my gem env:
RubyGems Environment:
  - RUBYGEMS VERSION: 1.3.7
  - RUBY VERSION: 1.8.7 (2010-04-19 patchlevel 253) [x86_64-linux]
  - INSTALLATION DIRECTORY: /usr/local/lib/ruby/gems/1.8
  - RUBY EXECUTABLE: /usr/local/bin/ruby
  - EXECUTABLE DIRECTORY: /usr/local/bin
  - RUBYGEMS PLATFORMS:
    - ruby
    - x86_64-linux
  - GEM PATHS:
     - /usr/local/lib/ruby/gems/1.8
     - /home/allen/.gem/ruby/1.8
  - GEM CONFIGURATION:
     - :update_sources => true
     - :verbose => true
     - :benchmark => false
     - :backtrace => false
     - :bulk_threshold => 1000
     - :sources => ["http://rubygems.org/", "http://gemcutter.org/"]
  - REMOTE SOURCES:
     - http://rubygems.org/
     - http://gemcutter.org/