Thanks! turns out I had to install xcode. Perhaps the old version of xcode was interfering with the command line tools.
Before installing xcode my gcc version was:
i686-apple-darwin11-llvm-gcc-4.2 (GCC) 4.2.1 (Based on Apple Inc. build 5658) (LLVM build 2336.11.00)
Copyright (C) 2007 Free Software Foundation, Inc.
This is free software; see the source for copying conditions. There is NO
warranty; not even for MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.
After installing xcode it became:
Configured with: --prefix=/Applications/Xcode.app/Contents/Developer/usr --with-gxx-include-dir=/usr/include/c++/4.2.1
Apple LLVM version 5.0 (clang-500.2.79) (based on LLVM 3.3svn)
Target: x86_64-apple-darwin13.0.0
Thread model: posix
Then I recompiled ruby and everything worked. Thought to post it here in case anyone runs to this issue too.