Cannot create virtualenv instance in python 2.7.5 because of pip installation error
This is logged as an issue with the recently released virtualenv 1.11. I had similar issues on Windows with this release.
I believe installing virtualenv 1.10.1 will let you continue working until this issue is addressed.
As timborden said in a comment: version 1.11.2 (of 2014-01-26) fixes this.
"Fixed easy_install installed virtualenvs by updated pip to 1.5.2"
See changelog at: https://pypi.python.org/pypi/virtualenv