The oiler (also known as Billie) dying at the end of the story is an example of situational irony. His character is physically strong, so when all the men have to swim to the shore lest they drown, he is far ahead of the others. The reader would naturally expect for the most physically fit and most hardworking character to survive. He is even the only one to have a name, which is a symbol of humanity. The name may be taken as a sign of importance, a mark that suggests the named character is less likely to die and more likely to succeed than the unnamed characters.
Crane subverts the reader's expectation, however, by having Billie be the only one of the men to die. This choice heightens the tragic aspect of the story and emphasizes many of the main themes.
As much as readers might have sympathized with the oiler up to this point, Crane's point is that the world does not care who deserves to die. Fate is arbitrary and mortality is the only certainty. No matter how strong or good a person is, they are still vulnerable to death, because they are mortal. No matter how weak or bad one is, they are still able to be saved by fate, because fate is random. Crane uses situational irony to play off the reader’s expectations in order to rebuff and subvert them.
Crane uses dramatic irony to demonstrate the randomness of fate and the occasional irrationality of optimism. At first, the men rejoice when they see a lighthouse in the distance, for they believe that it contains people capable of saving them. They even celebrate by sharing cigars. However, their rescue is not as expedient as they hoped it would be. The men do not see any signs of life at the lighthouse, nor does any ship come out to help them.
The four men make bitter comments about the lighthouse residents' eyesight, not realizing the real kicker—that the lighthouse is empty:
It is fair to say here that there was not a lifesaving station within twenty miles in either direction; but the men did not know this fact, and in consequence they made dark and opprobrious remarks concerning the eyesight of the nation’s lifesavers. Four scowling men sat in the dinghy and surpassed records in the invention of epithets.
The reader learns of the abandonment of the lighthouse before the characters do, emphasizing the low chance that they'll be rescued. Not only is no one coming to save them, but they are under the false sway of cruel optimism.
The insistence of the characters that there is someone present in the lighthouse parallels the insistence that there are gods or fate running one’s life. It demonstrates Crane’s atheistic outlook: that humans will keep believing that there is something to save them, even when their experience suggests no one is home. The men in the boat, by continuing to hope their saviors are still in the lighthouse contrary to all evidence, demonstrate naive optimism in the face of the indifferent universe. The use of dramatic irony underscores Crane's point.