A free-flowing, hydrophobic starch composition has a near-neutral dry product pH. Methods for making the hydrophobic starch composition by preparing an aqueous mixture comprising a starch, a siliconate, and an acid, where the aqueous mixture has a near-neutral pH, and drying the starch solids to obtain a hydrophobic starch. Novel fuel compositions comprise hydrophobic starch which can be used in internal combustion engines, such as diesel engines. Hydrophobic starch compositions may be used as fuels or fuel components. Novel methods of fueling and operating internal combustion engines use hydrophobic starch as fuel or fuel components.