Hi Bruce,
Good question.
Always alcohol because you apply the stain and then burn it off. Yes, you set the thing on fire and then put it out. Don't apply a lot, just enough to coat it and you should not let it dry. You don't want to burn off all of the alcohol otherwise it can leave a residue or too deeply embed into the grain, so use a light coat. Many pipes have multiple colors added and then burned off in sequence.
Oil based stains will burn long enough to damage the wood, infiltrate the grain and leave a mess on the pipe that would require a lot of work to sand off and it's probable that you would impair (or ruin) the shape.
It takes a bit of trial and error.
I'll add this segment of something that I just wrote to a friend:
Black background is generally good, do it twice if needed or else do it after the finishing sand (not polishing) so that you don't remove as much color but you must not mask the grain. Red can add dimension as a background if the black is well peeled (removed properly). Upshall used red on their high grade straight grains to make the grain pop. I assume that you’re using Fiebing’s leather stains?. I’m not sure if the USMC is the best black (I just don’t know). To start you could use a black, 2-3 densities of brown perhaps including cordovan, red and orange and you can mix the colors.