Sass file watcher errors out

so I create a .scss file in a directory in my project
I get a message asking me to set up a file watcher
I click "add watcher"
then I get an output window with the following output :

/usr/bin/scss --no-cache --update blah.scss:blah.css

/System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/ruby/1.8/rubygems.rb:777:in `report_activate_error': Could not find RubyGem sass (>= 0) (Gem::LoadError)

 from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/ruby/1.8/rubygems.rb:211:in `activate'

 from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/ruby/1.8/rubygems.rb:1056:in `gem'

 from /usr/bin/scss:18

when I run
/usr/bin/scss --no-cache --update blah.scss:blah.css
on the commandline from the dir where blah.scss lives it correctly generates blah.css

Anyone have any ideas why the watcher doesn't believe it can find the gem?

Be at ease,
Kristopher.