Gandalf is sent to aid the free people of Middle earth. He is specifically forbidden to contest with Sauron directly. Cirdan the Shipwright, one of the most powerful of elves in all of history recognizes his greatness and surrenders to him the Elven ring, to sustain him in his trials. Galadriel tries to have Gandalf made head of the White Council, but is unsuccessful, and Saruman is appointed instead.
Sauruman is a student of magic, particularly the magic of Sauron. He falls prey to the desire for power, and mastery inherent in the One Ring. Galadriel is tempted as well, to seize this power, but refuses to even touch the ring. Gandalf does touch it, in Fellowship of the Ring, for a moment. He does not desire power or dominion over others. He does not overcome death, he is sent back to finish his task. Olorin was of the same race as Sauron, and Melian, and the guise of Gandalf was only an aspect of his being.
When Gandalf confronts Sauruman he is there to offer him a chance to renounce his power. Sauruman refuses. Gandalf simply says, “Your staff is broken.” The staff breaks. Sauruman turns away, but Gandalf orders him to return and that order is obeyed even against Sauruman’s extreme effort to resist. Gandalf is already the White Wizard, and is offering Sauruman a chance to be simply a Good Wizard. So, it seems that Sauruman is the lesser in power, at least now. Perhaps that was true before, but Gandalf does not seek the center of authority.
Several other moments occur when Gandalf simply says “This will happen.” and it does. He tells the Lord of the Nazgul to leave the gates of Minas Tirith, and to the doom that awaits him. The cock crows, foretelling the coming of dawn. The Nazgul leaves and is immediately destroyed. He tells Grima to get down in the dirt, and Grima does. He tells the Lord of Rohan that he is a messenger of hope, and a beam of sunlight shines down out of the clouds on him. Gandalf is not unable to do combat type magic, he is unwilling. He is also pretty much immune to it, by the end of the story.
I think that Sauruman lost his power because of his choices of how to use that power. Since it was power given to him, he was not able to use it to do evil without reducing himself. Eventually, he is so weak that even a small party of Hobbits is more than a match for him.
Tris
“What has it got in its pocketeses?” ~ Gollum ~