diff --git a/pelican/__init__.py b/pelican/__init__.py
index 0c0227f0..20f3862e 100644
--- a/pelican/__init__.py
+++ b/pelican/__init__.py
@@ -24,7 +24,7 @@ class Pelican(object):
                     ' (see pelican --help for more information)')
 
         if self.path.endswith('/'):
-            self.path = path[:-1]
+            self.path = self.path[:-1]
 
         # define the default settings
         self.settings = settings
diff --git a/pelican/settings.py b/pelican/settings.py
index d1826710..98a11216 100644
--- a/pelican/settings.py
+++ b/pelican/settings.py
@@ -74,5 +74,11 @@ def read_settings(filename):
     else:
         log.warn("LOCALE option doesn't contain a correct value")
 
+    # Make the paths relative to the settings file
+    for path in ['PATH']:
+        if path in context:
+            if not os.path.isabs(context[path]):
+                context[path] = os.path.abspath(os.path.normpath(os.path.join(os.path.dirname(filename), context[path])))
+
     # set the locale
     return context