I know he is described as the wisest of all Istari/Maiar (the exact word used in that instance escapes me) and I believe, I am however not sure, that he was offered the position of head of the white council but refused it. Does he in fact rank higher than Saruman, even before his death as Gandalf the Grey against the Balrog? Or is he simply wiser?
The answer depends on 'when' and 'where'.
The Istari were sent to Middle Earth to counter-balance Sauron but they were forbidden to utilize all of their powers. Like Sauron, they were Maiar that took human form, but they didn't fully remember their past and somehow knew internally their restrictions on use of force. Sauron had no such restrictions.
Saruman was the acknowledged Head of the Order of Istari, as stated by Gandalf. Therefore, within Middle Earth, Saruman was the established 'most powerful' Istari... at least in the beginning.
Once Gandalf the Gray's body was lost in the fight against the Balrog, Gandalf went back to Valinor and he was instructed (presumably by Manwe) to go back to Middle Earth and take the form of 'Gandalf The White' to finish his work and replace Saruman who had lost his bearings. At this point in time, Gandalf was the most powerful Istari within Middle Earth.
Back in Valinor, Maiar are generally paired up with their more powerful Valar mentor. Olorin served Manwe whereas Curumo served under Aulë. Olorin was the most powerful Maiar within Valinor. It was stated that Olorin was the wisest Maiar and since he also had the most powerful Valar on his side, I'd state that that would make him the most powerful Maiar. (Even more so than Sauron.)
So Gandalf was the most powerful in Valinor, and also within Middle Earth after turning into Gandalf the White. Saruman was most powerful within Middle Earth until being replaced by Gandalf the White.
In the Valaquenta Olórin is indisputably named as the wisest:
Wisest of the Maiar was Olórin. He too dwelt in Lórien, but his ways took him often to the house of Nienna, and of her he learned pity and patience.
Since Olórin was the wisest Maia, then Olórin-as-Gandalf must likewise be the wisest Istar.
Regarding ranking within the Order of the Istari, we have the following statement in RotK (Tale of Years for the Third Age):
The two highest of this order (of whom it is said there were five) were called by the Eldar Curunír, “the Man of Skill”, and Mithrandir, “the Grey Pilgrim”, but by Men in the North Saruman and Gandalf.
So this establishes for us that the top two spots are taken by Saruman and Gandalf, but which takes the first?
Before we can look at that however, we need to deal with one possible contradiction, from the original choosing of the Istari, again sourced from Unfinished Tales:
But two only came forward: Curumo, who was chosen by Aulë, and Alatar, who was sent by Oromë. Then Manwë asked, where was Olórin? And Olórin, who was clad in grey, and having just entered from a journey had seated himself at the edge of the council, asked what Manwë would have of him. Manwë replied that he wished Olórin to go as the third messenger to Middle-earth...
This suggests that a ranking may be Saruman/Alatar/Gandalf, but it may alternatively be read as just the order in which the messengers were chosen. We also need to consider Varda's enigmatic "not as the third" remark (which it's noted that Curumo remembered). However, and since Alatar went to the East anyway, it's easier to just solve the problem by ignoring it, and confine further discussion to those of the Istari who remained in the West of Middle-earth.
So, for a relative ranking of Saruman and Gandalf, we can look at Gandalf's statement at the Council of Elrond:
Saruman the White is the greatest of my order.
That's definitive - Saruman ranks higher than Gandalf, or at least higher than Gandalf the Grey.
It's quite clear that Gandalf the White is another matter entirely. As the White, Gandalf is able to cast Saruman out from the Order, so as the White Gandalf is definitely a "more powerful" being, at least so far as their ranking in the Istari is concerned.
From Two Towers, Aragorn speaks about Saruman:
Once he was as great as his fame made him. His knowledge was deep, his thought was subtle, and his hands marvelously skilled; and he had a power over the minds of others. The wise he could persuade, and the smaller folk he could daunt. That power he certainly still keeps. There are not many in Middle-earth that I should say were safe, if they were left alone to talk with him, even now when he has suffered a defeat. Gandalf, Elrond, and Galadriel, perhaps, now that his wickedness has been laid bare, but very few others.
Brief description of Saruman's past:
Saruman was the first of the five Wizards to arrive in Middle-earth, at the end of the first millennium of the Third Age. He was said to be the eldest of the order, and Gandalf acknowledged him as the chief of the Istari. Many feared the White Wizard and his compelling voice; even Sauron himself.
We can clearly see that Saruman was the more powerful Istari and acknowledged by Gandalf when he was Gandalf the Grey. As quoted, he was even feared by Sauron himself for his abilities and power, thus the alliance between the Two Towers. Gandalf the Grey was wiser than any Maiar (Saruman the Istari included), but not the most powerful one.
Gandalf was the wisest of the Maiar. When the Valar decided to send the order of the Istari (also known as Wizards) to Middle-earth, to counsel and assist all those in Middle-earth who opposed the Dark Lord Sauron Manwë and Varda decided to include Olórin among the five who were sent.
When Tolkien said that Gandalf is the wisest one, he means to say that he is the one that is reasonable, the one that makes best choices.
He later revealed himself as one of the Istari, and eventually became known as the wisest of and most powerful of that order. Although Saruman was at first more powerful, was more knowledgeable about many matters regarding Sauron and the Rings of Power, and was head of the White Council before the War of the Ring, he later grew jealous and afraid of Gandalf.
Here we can see that Saruman darkens, he becomes afraid of Gandalf the Grey as Gandalf grows more powerful himself, Saruman sees him as a threat to his position and power. His new knowledge tells him that there is something in Gandalf the Grey that he should fear if he turns sides, which he eventually does and needs Gandalf on his side or needs him to be destroyed.
Saruman, before his fall, was the chief of both the wizards and of the White Council. His knowledge and skill, especially of Sauron's devices, was said to be great (the name "Saruman" means "man of skill"). However, his deep study of the One Ring and Sauron's other magic corrupted him, and his overweening lust for power led to his downfall.
Here we can see that his knowledge of the "dark things" of Sauron is more powerful than Gandalf's knowledge of the same. Yet, Gandalf has other, greater powers on his side which are not revealed to Saruman and don't become clear to him even after his fall.
After Gandalf's resurrection/restoration as Gandalf the White, he had far more power than that of Gandalf the Grey. We can also conclude that he has a force on his side that is more powerful that the force or forces of both Saruman and Sauron. Neither Saruman nor Sauron would have been resurrected/restored as Gandalf did. On describing his resurrection Gandalf the White states:
I was sent back – for a brief time, until my task is done.
Saruman used forces that seem more powerful than the forces of Gandalf the Grey. Gandalf was the wisest one - in this we can conclude that he knew not to touch the The Ring and not to "touch" devices of Sauron and the other (dark) forces of power. Saruman had power, but to what extent? After it was taken away from him, he was only left with his own voice (which was his strongest power) to delude the weaker minded. At his lowest he was afraid of Gandalf more then ever before.
Attempt at a conclusion: There is a distinction between good and evil in Tolkien's writing, and as it often goes in a story, the good forces are always more powerful in the end. We could see that at the end of LOTR. Tolkien clearly stated that Gandalf was good and that Sauron was evil, but Saruman could be considered grey. Saruman only did what was best for him, or he thought it best, ignoring the advice of others.
Gandalf said, "I liked white better", and Saruman replied "White! It serves as a beginning. The white page can be overwritten. The white cloth can be dyed, and the white light may be broken."
This is Saruman stating that the powers he acknowledged before - as they served him best at that time (he considered them more powerful than any), are not more powerful than the knowledge he has now (the dark powers). After Gandalf was resurrected/restored as Gandalf the White, he was given more knowledge and power in the forces of the "white light", like it was given to Saruman, but he never learned to use it and he never understood it. For this reason, Gandalf's wisdom is more powerful than Saruman's voice of madness.
Hope this answers your question.
Saruman was more powerful, as evidenced by the fact that he was able to imprison Gandalf and was obviously confident of his ability to both imprison him and hold him until he could "convince" Gandalf to change sides. He didn't consider a captive Gandalf a threat at all, and even on breaking free of prison Gandalf fled rather than trying to fight back. Having said that the confrontation did happen in Saruman's tower which may well have given him a "home field" advantage or even a direct boost of power in that confrontation.
It's noticeable that when Gandalf returned as Gandalf the White he was considerably more powerful than he had been as Gandalf the Grey. This suggests that just the post of "the White" as head of the order confers extra power.
In wisdom though there is no doubt that Gandalf prevails. Saruman's power led to a pride and over-confidence that was shown by Tolkien as the main weakness of many of his characters, and was the route through which Sauron worked to corrupt them.