I migrated to 1.8.7 Ruby and now I keep getting this error and it is driving me crazy. I try installing it manually using gem install soap4r and also include it as a config.gem 'soap4r' and rake gem:install and still nothing....
It's blowing up on my heroku install too....
Try to load it as
require 'soap4r' in your code
And make sure you installed soap4r with all the dependencies
here is a link for how to install it - http://www.tutorialspoint.com/ruby/ruby_web_services.htm
cheers
sameera