Deploying Rails app with Capistrano

Question

I just acquired a Media Temple (dv) 4.0 server to deploy a Rails app I created via a git repository. I'm new to Rails but Capistrano deployment seemed pretty straightforward. Nonetheless, I've been working all day on getting my first Rails project deployed. Here's the error I'm getting when I execute "cap production deploy -v" after setup and check:

** [out :: 64.207.184.51] rake aborted!
** [out :: 64.207.184.51] no such file to load -- rubygems

I have been installing gems all day on the server, so I don't think rubygems isn't installed. This is after hours of debugging why it was telling me my public key is invalid.

Here are my configuration files:

Capfile:

require 'capistrano/ext/multistage'

load 'deploy'
load 'deploy/assets'
load 'config/deploy'
set :application, 'snippet'
set :domain, '[server IP address]'
set :user, 'root'

config/deploy.rb

require 'capistrano/ext/multistage'
default_run_options[:pty] = true
set :stages, ["production"]
set :default_stage, "production"
set :application, "[app name]"
set :scm, :git
set :repository, "[email protected]:[github.com repository]"
set :branch, "master"
set :user, "root"
set :use_sudo, false
set :deploy_via, :remote_cache
set :scm_passphrase, "[public ssh key passphrase]"

config/deploy/production.rb

server "[server IP]", :app, :web, :db, :primary => true
set :deploy_to, "/var/www/vhosts/[domain]/httpdocs"

output of error:

vespertine:snippet nporteschaikin$ cap production deploy -v
** transaction: start
/Users/nporteschaikin/.rvm/gems/ruby-1.9.2-p320/gems/capistrano-2.13.4/lib/capistrano/recipes/deploy.rb:107: warning: Insecure world writable dir /Users/nporteschaikin/.rvm/gems/ruby-1.9.2-p320/bin in PATH, mode 040777
Password: 
** [IP-ADDRESS :: out] Enter passphrase for key '/root/.ssh/id_rsa':
** [IP-ADDRESS :: out]
** [IP-ADDRESS :: out] Enter passphrase for key '/root/.ssh/id_rsa':
** [IP-ADDRESS :: out]
** [out :: IP-ADDRESS] (in /var/www/vhosts/[domain.com]/httpdocs/releases/20121021210706)
** [out :: IP-ADDRESS] rake aborted!
** [out :: IP-ADDRESS] no such file to load -- rubygems
** [out :: IP-ADDRESS] /var/www/vhosts/[domain.com]/httpdocs/releases/20121021210706/Rakefile:5:in `require'
** [out :: IP-ADDRESS] (See full trace by running task with --trace)
*** [deploy:update_code] rolling back
failed: "sh -c 'cd /var/www/vhosts/[domain.com]/httpdocs/releases/20121021210706 && rake RAILS_ENV=production RAILS_GROUPS=assets assets:precompile'" on IP-ADDRESS

Please help! I installed RVM, Ruby, Passenger, and Rails on the server.